Yen tumbles to 3-year lows

Published September 22, 2002

NEW YORK, Sept 21: The yen tumbled to three-year lows against the euro and three-month troughs against the dollar on Friday, as investor anxiety deepened about Japan’s troubled financial system and struggling economy.

Japanese policy-makers’ inaction, even after the Bank of Japan’s recent unorthodox measure in offering to buy shares from banks, and unprecedented news of a failed Japanese government bond auction conspired to slam the yen more than a full per cent lower against the dollar.

The relatively unconstrained euro raced up above 121.40 yen, its highest level since August 1999 and nearly 1-1/2 yen above the three-year highs it hit a day earlier. In late US trading, the euro was around 121 yen, up nearly a full per cent on the day.

The humiliation of the failed auction overnight plus the one-two punch of hysterical BOJ policy and no fiscal or government policy, shows the level of disrepair the economy is in, Rhame said.

The dollar was around 123.30 yen in late New York trade, up more than 1.50 per cent on the day. But the greenback stayed off three-month highs at 123.72 yen, weighed down by lingering market jitters about war in Iraq and fears of possible terrorist attacks on US soil a week after the one-year anniversary of the Sept. 11 attacks on America.

Vague rumours yanked the dollar lower in early US trade and kept it subdued for the rest of the day, dealers said.

The euro shot up on the unnerving talk, but retreated when it became clear there was little substance to the rumors. In late US trading, the European single currency was around 98.15 cents, down 0.50 per cent on the day and well below two-week highs hit earlier at 98.75 cents.

Sterling was down 0.15 per cent from the previous US close, trading around $1.5540 in late New York. Against the beleaguered yen, the pound soared above 192 yen, its highest levels since January 2002.

Hints from Bank of England Governor Sir Edward George that interest rates could be cut further if financial markets worsened gave the pound little direction, dealers said.—Reuters

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