The yen fell late in Tokyo Tuesday, january 23, after Bank of Japan governor Masaru Hayami disappointed investors who had been hoping for a bolder policy stand against market instability.
"Investors have been waiting all day for his first comments since Friday," when Hayami surprised investors by backing an injection of central bank funds into the markets, said Bank of Tokyo-Mitsubishi dealer Kiyoshi Kuzuhara. "They expected Hayami to discuss concerns about the weak yen and weak share prices in a manner that would be more aggressive and direct than what he said last Friday," Kuzuhara said.
"While Hayami did mention the weak yen and weak Nikkei, there was no surprise in his comments. Investors who bought the yen on expectations of a bold move from Hayami quickly sold the currency afterwards," he said.
The yen was quoted at 117.07-10 against the dollar at 5:00 pm (0800 GMT), down from 116.32 in New York and 116.83-87 in Tokyo Monday afternoon.
Against the euro, the yen traded at 109.85 around 5:00 pm, down from 109.22 in New York and 109.43 in Tokyo late Monday.
Hayami told an afternoon news conference that the weak yen and Nikkei-225 share average were concerns for the Bank of Japan. But politicians in the ruling Liberal Democratic Party were going too far in launching a committee to examine measures to support the bourse, he said. "If the market judges that they have gone too far in the selling, I hope the market will become aware of the excessiveness and return to stability," the Bank of Japan governor said.
But, "it is not appropriate to run financial policy with the intention of directly aiming to boost share prices. This is a notion that is widely shared by central banks overseas."
Aside from Hayami's speech, the yen was under pressure as investors secured profits ahead of the Chinese New Year break in much of Asia. "On top of all that, Chinese, Taiwanese and Hong Kong dealers are adjusting their positions ahead of the Chinese New Year which starts tomorrow," Mitsubishi Trust and Banking group manager Toshihiko Sakai said.
The euro meanwhile bought $0.9405-08 at 5:00 pm, regaining the $0.94 level after trading at $0.9390 in New York and $0.9366-69 in Tokyo Monday afternoon. "The euro was supported by a US report which suggested sluggish economic growth," Sakai said.
The index of leading economic indicators — a gauge of US economic activity six to nine months in the future —fell 0.6 percent in December, figures showed Monday. But gains in the euro were constrained by other findings published Monday which suggested the business climate in Germany cooled last month. The index for western Germany, as calculated by the Ifo economics research institute, fell to 96.5 in December from 97.0 in November. It was the lowest level since October 1999, when the index had stood at 96.0.
"Sentiment surrounding the euro is weak" after the Ifo release, Singapore bank DBS Group said in a report. "The market is starting to question euroland's ability to catch up with the US despite a slowdown in the latter. The usual 'when the US sneezes, the rest of the world catches a cold' is gaining more believers," it said.—(AFP)
© Agence France Presse 2000
© 2001 Mena Report (www.menareport.com)
