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Dollar drifts lower to mid-123 yen in quiet Tokyo trading.

TOKYO, June 4 Kyodo

The U.S. dollar drifted down to the middle of the 123 yen level in Tokyo on Tuesday in quiet trading amid wariness of further dollar-buying, yen-selling interventions by the Bank of Japan (BOJ).

At 5 p.m., the dollar was quoted at 123.39-43 yen compared with Monday's 5 p.m. quotes of 123.55-65 in New York and 124.27-30 yen in Tokyo.

The dollar rose to 123.80 yen in the morning and touched the day's low of 123.35 yen in the afternoon. Its most frequently traded rate was 123.60 yen.

The euro, meanwhile, was quoted at $0.9436-9439 and 116.45-49 yen at 5 p.m. compared with $0.9405-9415 and 116.25-35 yen in New York at 5 p.m. Monday.

''People were sitting on the sidelines, unable to move because of the possibility of intervention,'' said Nobuaki Kubo, foreign exchange manager at Daiwa Bank.

The BOJ last Friday stepped into the market to stem the yen's rise for the third time in two weeks, following interventions May 22 and 23.

Finance Minister Masajuro Shiokawa said Tuesday morning that foreign exchange movements should be stable, while Zembei Mizoguchi, head of the Finance Ministry's International Bureau, said appropriate measures will be taken when necessary.

''The comments deterred players from buying the yen even though the data for the Japanese economy was good,'' Kubo said, referring to the release of the coincident index in April which came to 77.8%, above the boom-or-bust line of 50% for the second straight month.

Dealers said the market is also in a cautious mood ahead of the release on Friday of Japan's gross domestic product data for the January-March quarter. They predicted the dollar is likely to stay in a narrow range until then.

They said however, that worries about U.S. stocks and fears of further terrorist attacks in the United States are likely to continue to overshadow the U.S. currency.

''The next target is to push the dollar to the 122.50 yen,'' Kubo said.

Dealers said they are not concerned about the negative effect of the faltering U.S. stock market on Tokyo stocks.

''The view is that Tokyo stocks aren't doing badly,'' said Hideyuki Tsukamoto, foreign exchange manager at Mizuho Bank.

He said that while players are keeping an eye open for another intervention, many are skeptical that the BOJ will be able to stave off a strong yen in the long term.

''The BOJ can't change the trend for a weak dollar and strong yen by conducting interventions on its own. And it's very unlikely that they will be able to persuade other countries to conduct joint interventions,'' Tsukamoto said.
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Publication:Japan Weekly Monitor
Date:Jun 10, 2002
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