The yen stabilized against the dollar in Tokyo Thursday, March1, following its dive in the wake of the decision by the Bank of Japan to cut interest rates, dealers said. The yen was quoted at 117.36-39 to the dollar at 5:00 pm (0800 GMT), up marginally from 117.38 yen in New York, but well down from 116.42-45 yen in Tokyo late Wednesday.
Earlier Thursday in Tokyo, the Japanese currency fell to a low of 117.58. "Investors sold the dollar and bought back the yen as the yen significantly weakened from yesterday's trade," said Sanwa Bank dealer Mitsuru Sahara. "Looking at the Japanese fundamentals, however, many investors will sell the yen towards the 120-125 yen level," Sahara said. “In line with the move by the BOJ, the yen is under selling pressure," Fuji Bank dealer Hideyuki Tsukamoto agreed.
On Wednesday, Japan's central bank surprised financial markets by cutting interest rates in a bid to help secure the recovery of the world's second biggest economy. The BOJ said it had decided to cut the key overnight call rate to 0.15 percent from 0.25 percent and the largely symbolic discount rate to 0.25 percent from 0.35 percent.
The yen was also under pressure from the tumbling Nikkei stock index, which fell to a 15-year low Thursday. "Investors are bearish due to the weak stock market and rising concerns about Japan's economic recovery," Tsukamoto said. The Tokyo Stock Exchange's Nikkei-225 average closed down 1.6 percent, or 201.88 points at 12,681.66, its lowest level since November 20, 1985, when it ended at 12,642.89 as Japan was heading into the "bubble economy" investment boom.
The euro meanwhile was quoted at $0.9260-63 in Tokyo around 5:00 pm, up from $0.9241 in New York and $0.9217-20 in Tokyo Wednesday afternoon. Against the yen, the euro was quoted at 108.73, up from 108.48 in New York and 107.26 in Tokyo late Wednesday. "Investors sold the dollar and bought the euro amid the lack of fresh leads," said ABM AMRO's dealer Toshiyuki Takamatsu. “The only currency investors can rely on is the euro, as the US and Japanese economies stumbled," Takamatsu said.
"Given the relative deterioration in US economic conditions coupled with positive eurozone data, the euro looks poised for a more sustainable move higher," research house IDEAglobal in Singapore agreed. "The unit appears to be on a better footing above $0.9220 with initial support seen at $0.9180," it said. —(AFP)
© Agence France Presse 2000
© 2001 Mena Report (www.menareport.com)
