The yen rose in nervous Tokyo trading Thursday. February 22, following a rumour that embattled Prime Minister Yoshiro Mori would quit, dealers said. "An unfounded rumour that Prime Minister Mori will hand in his resignation hit the market around noon, driving share prices higher," said Kazuhiro Kaneko, a dealer from Mizuho Trust and Banking.
“Although the rumour soon turned out to be wrong, it continued to trigger yen-buying in line with investors' position adjustments," the dealer said.
The yen rose to 115.92-95 at 2:00 pm (0500 GMT), up from 116.56 yen in New York and 116.41-44 yen in Tokyo late Wednesday. Calls for the gaffe-prone Mori's resignation have multiplied after he continued to play golf after being told of a deadly collision between a US submarine and a Japanese fishing boat.
Tokyo share prices, which had threatened to drop to their lowest level since the economic boom of the late 1980's in the morning session, recouped much of the day's earlier losses in early afternoon trade, thanks to the rumour. The market plunge was initially triggered by a sharp falls in US markets Wednesday following higher than expected inflation figures.
The Tokyo Stock Exchange's Nikkei-225 index slipped below 13,000 points, losing 149.90 points or 1.1 percent to 12,950 by the morning close. It was just above the 12,879.97 closing price on October 9, 1998, the lowest close since the bursting of Japan's bubble economy in the late 1980s.
"There's no doubt the plunging share prices are threatening the yen," said Fuji Bank dealer Hideyuki Tsukamoto. "If the market sinks further, the yen could be sold down to near the 117-yen level."
The euro traded at $0.9073 around 2:00 pm, down from $0.9087 in New York and $0.9076-79 in Tokyo late Wednesday. It changed hands against the yen at 105.25 compared to 105.92 in Tokyo Wednesday afternoon. Investors' views were mixed over Turkey's decision on Thursday to scrap a managed exchange rate policy in the face of skyrocketing interest rates and financial turmoil.
"It was first seen as a negative factor for the euro, which will face more risks of being sold down under the floating system," said Kiyoshi Kuzuhara, a dealer at Bank of Tokyo-Mitsibishi. Research firm IDEAglobal said: "It will also affect the ability of Turkish companies to repay loans to European markets, and that will be a longer-term negative for the euro." —(AFP)
© Agence France Presse 2000
© 2001 Mena Report (www.menareport.com)
