Speculation about yen sends dollar down

March 17, 1993|By Bloomberg Business News

NEW YORK -- The dollar tumbled against the Japanese yen yesterday on news of disappointing housing starts and speculation that the Clinton administration might press for a stronger yen.

Elsewhere, the British pound jumped against the dollar and the mark as the British government's budget plan left interest rates there unchanged and kept alive the prospects for economic recovery.

The dollar began its slide against the yen after Japanese news reports said economist C. Fred Bergsten was advising the Clinton administration that the dollar should be weakened 10 percent against the the Japanese currency, according to MMS International.

Although Mr. Bergsten is not a member of the administration, the renewed speculation was enough to persuade some investors and traders to buy the yen and sell the dollar, traders said.

The dollar was quoted at 116.93 yen at 3 p.m. in New York, down from 118.58 yen Monday.

The yen might keep strengthening as Japan's huge trade surpluses outweigh any concern over the country's continuing political scandals or tensions on the Korean peninsula, said John Lyman, senior customer dealer at the Bank of Tokyo.

The dollar reached a post-World War II low of 115.85 yen Feb. 22 amid speculation that the Group of Seven industrialized nations would call for a stronger yen to curb Japanese exports.

The pound rallied after British Chancellor of the Exchequer Norman Lamont's annual budget announcement, which was considered largely benign for the currency, traders and analysts said.

Mr. Lamont's budget did not include an interest rate cut that would have undermined the pound and did not tighten fiscal policy enough to trim the large government deficit, said Lisa Finstrom, currency analyst at Lehman Bros. "Lamont wasn't terribly restrictive," she said. "He was obviously intent not to put the brakes on a fragile U.K. economy."

The pound climbed to $1.4490, from $1.4353.

After stumbling in early trading, the dollar regained its balance to finish little changed against the mark.

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