Dollar at 2 1/2-Year High Against Yen Despite Fed’s Intervention
NEW YORK — The dollar closed above 150 Japanese yen for the first time in 2 1/2 years Friday despite repeated attempts by the Federal Reserve Board to halt the currency’s rise.
In New York, the dollar closed at 150.15 yen, compared to 149.85 Thursday. It was the dollar’s highest close against the yen since Aug. 14, 1987, when it closed at 151.50.
Against the West German mark, the dollar succumbed to intervention by West German’s central bank, the Bundesbank, and closed slightly lower at 1.7150 marks, compared to 1.7194 Thursday.
The Japanese yen has been weakening amid stock market turmoil that has caused money to pour into dollar-denominated investments. An interest rate increase has been widely expected in Japan, but many traders fear that would fuel yet more selling on the volatile Tokyo Stock Exchange.
The Fed sold dollars openly in the morning and more discreetly in the afternoon, traders said, but the currency broke the 150-yen barrier shortly after noon and never looked back.
The dollar closed slightly below its high for the day of 150.45 yen as traders hedged slightly before a meeting of finance officials from major industrialized nations to take place in Japan next week.
The Bundesbank was reported to have sold dollars at about 1.7180 marks, its first such action since Jan. 4. The West German currency has been hurt by concern over the potentially inflationary impact of unification.
The Bundesbank’s move took the market somewhat by surprise, as dealers had not expected the West German central bank to intervene unless the dollar rose to 1.7300. Nevertheless, the dollar closed well above its lows against the mark.
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