Dollar gains ground in Tokyo trade on weak Japanese shares
( 2001-07-23 12:45) (7)
The dollar rose in the morning trade in Tokyo Monday as sharp falls in Japanese share prices prompted market participants to return to the US currency, dealers said.
The dollar also gained ground after the Group of Eight summit provided few further reasons to sell the greenback, which had seen speculative losses ahead of the meeting on comments by US President George W. Bush, dealers said.
The dollar traded at 123.43 yen around 11:30 am (0230 GMT) in Tokyo Monday, against 122.96 yen in New York and 123.11 yen in Singapore late Friday.
The Tokyo market was closed on Friday for a public holiday.
"Weak stock prices in Tokyo triggered sales of the yen among foreigners," said Kiyoshi Kuzuhara, a dealer at Bank of Tokyo Mitsubishi.
"The dollar is facing resistance just below the 123.60 yen level, but it is firming although the market overall is quiet," he said.
Share prices in Tokyo fell 2.4 percent Monday morning with the Nikkei-225 index losing 288.75 points to end the morning session at 11,619.64.
Stockbrokers said Japanese share prices were pulled down on lingering investor concerns that Japanese Prime Minister Junichiro Koizumi has not released concrete details of his much talked about reform plans.
ABN AMRO foreign exchange manager Toshihiko Masaki added the dollar recovered Monday after a largely uneventful G8 summit during the weekend in terms of foreign exchange news.
Before the meeting, investors pushed the dollar lower on comments by Bush that the markets should decide foreign exchange levels, read as a possible backing away from the policy of keeping the US currency strong.
While Bush reiterated his comments at the summit, he said it was not the role of the government to lower the value of the dollar and other officials stressed that US foreign exchange policy has not changed.
"There was nothing special. (Bush) cannot say the dollar is overvalued ... despite the claims of US manufacturers," who are concerned that their export competitiveness is being undermined, Masaki said.
"The strong dollar is beneficial for flows into the US capital markets. (Bush) pointed out this factor," he said, noting that speculation about US policy will continue.
The euro trade saw little action amid a dearth of fresh incentives Monday, Kuzuhara said.
The euro bought 0.8703 dollars around 11:30 am, against 0.8715 dollars in New York and 0.8739 dollars in Sinpagore Friday afternoon.
Against the yen, the euro was quoted at 107.43, compared with 107.18 in New York and 107.64 in Singapore late Friday.
"Investors are just waiting until the European market opens after the weekend," Kuzuhara said.
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