Selling of yen fails to halt dollar’s slide

The dollar jumped almost 3 yen at one stage Monday in Tokyo on a bout of market intervention by the Bank of Japan, but later eased due to expectations of an economic recovery in Japan.

At 5 p.m., the dollar changed hands at 104.85-88 yen, up sharply from 102.75-85 yen at 5 p.m. Friday in New York, but down from its intraday high of 105.65 yen touched during the morning.

The dollar registered a low of 102.82 yen in early morning deals, a level last seen Jan. 5 in Tokyo, and most frequently changed hands at 104.90 yen.

Zembei Mizoguchi, head of the International Bureau at the Ministry of Finance, said, “We took appropriate steps this morning,” indicating that the central bank had conducted yen-selling intervention.

It was the BOJ’s first intervention since March 15 and the fourth this year.

Finance Minister Kiichi Miyazawa expressed a strong desire to stem the yen’s upsurge. “We don’t want rapid fluctuations in the currency rates. We’ll take action” until the rates become desirable, he said.

Dealers, however, said Japanese authorities should do more to effectively prevent the dollar from falling below 105 yen.

Although the day’s interventions were well-timed and larger in scale when compared with the previous ones, dealers now see mounting yen-buying pressure based on optimism about the Japanese economy.

“If authorities continue tolerating the dollar slipping to the 104 yen level, the impact of the single-day intervention will soon wane,” said Hideyuki Tsukamoto, foreign exchange manager at Fuji Bank.

The BOJ’s quarterly “tankan” report on business confidence, released in the morning, showed improved sentiment among Japanese corporate executives in March compared with three months earlier.