The dollar nearly reached the 116 yen level in Tokyo trading June 12 after remarks made by a senior Finance Ministry official triggered massive short-covering.
At 5 p.m., the dollar was quoted at 114.36-39 yen, up sharply from 110.89-92 yen June 11, with the bulk of yen-dollar trading taking place at 111.90 yen, compared with 111.35 yen the previous day.
Apparently concerned about the U.S. currency’s first foray below 111 yen in roughly seven months on June 11, Director General Eisuke Sakakibara of the finance ministry’s International Finance Bureau again stepped in to stall the yen’s unabating appreciation.
Sakakibara, who has earned the nickname “Mr. Yen” for his influence over the foreign exchange markets, said June 12 that he was confident that Japan’s external surplus would not significantly increase. He also said Prime Minister Ryutaro Hashimoto told monetary authorities overnight to take timely and appropriate measures to rein in excessive foreign exchange rate swings. His remarks set off a flurry of short-covering and launched the greenback as high as 115.80 yen just before midafternoon, in a leap exceeding 4.50 yen, according to dealers.
Before Sakakibara’s comments came into play, the dollar was holding slightly firmer above 112 yen much of the morning here, after U.S. fund managers and Japanese bank dealers chose to cover their short dollar positions, they said. The intraday low was 111.17 yen, dealers said.
After Sakakibara’s dollar comments, former Vice Finance Minister for International Affairs Tomomitsu Oba spoke up in his belief that Sakakibara favors a yen-dollar trading range just above 120 yen, which fueled the afternoon dollar-buying binge, they said.
After losing some earlier gains under profit-taking pressure, the dollar maintained a level above 114 yen for the rest of the day, they said.