CURRENCY : Dollar Reaches 3-Year High Against Yen
The dollar climbed to a three-year high against the tumbling yen Tuesday as confusion over Tokyo’s monetary policy continued to drag down the Japanese currency.
The dollar closed mostly higher against other major currencies, including the West German mark, which has been weighed down by uncertainty over the impact of German unification and the crisis in Lithuania.
The dollar strengthened in Tokyo to 156.96 yen, up from 156.40 Monday. Later in London, the dollar traded at 157.35 yen. By the time trading concluded in New York the dollar fetched 157.74 yen, up from 156.70 yen late Monday.
The dollar ended the morning session today at 158.75 yen, up from 158.30 yen at the opening and 156.96 yen at Tuesday’s close. It ranged between 158.15 yen and 158.85 yen during morning trading.
The dollar last traded at the 158-yen level in January, 1987.
The yen’s weakness this year was propelled by confusion over Japan’s monetary policy and the steep fall in the Tokyo stock and bond markets.
The recent clash between Japan’s Ministry of Finance and the Bank of Japan before the central bank rose Japan’s key discount rate underscored the confusion.
Analysts suspect that it will take even higher Japanese interest rates to buoy the tumbling yen now.
“There is a lack of clear policy and control from the government” in Japan, said Susan Babcock, a corporate dealer for Hongkong Shanghai Bank in New York.
“The markets are dictating to the government rather than the government to the markets. They don’t know how to handle global markets,” she said.
In London, the pound strengthened for the fourth straight session, benefiting partly from a few large orders and a temporary market shortage of the British currency. It cost $1.6255 to buy sterling late Tuesday, more expensive than $1.6135 late Monday. In New York, the pound fetched $1.6260, more valuable than the $1.6185 rate late Monday.
Other late dollar rates in New York compared to levels late Monday included: 1.7128 West German marks, up from 1.7075; 1.5182 Swiss francs, down from 1.5205; 1.1765 Canadian dollars, up from 1.1760; 5.7610 French francs, up from 5.7480, and 1,258.50 lira, up from 1,256.00
Other late European dollar rates compared to Monday’s late rates: 1.7108 marks, down from 1.7155; 1.5173 Swiss francs, down from 1.5275; 5.7535 French francs, down from 5.7745; 1.9247 Dutch guilders, down from 1.9267; 1,261.75 lire, up from, 1,261.50, and 1.1761 Canadian dollars, up from 1.1748.
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