NEW YORK -- The dollar posted its biggest decline against the yen in more than six months after Japan's top currency official suggested yesterday that the yen's slide is ending.
Eisuke Sakakibara, the director general of the Finance Ministry's International Finance Bureau, told the Nikkei Financial Daily, "We are not thinking of leading the yen any lower."
"The dollar was fragile, and Sakakibara gave us a push over the edge," said Russ LaScala, manager of currency trading at Citibank.
The currency pared its losses in late New York trading when U.S. bonds and stocks staged a rebound after a better-than-expected Treasury auction of 30-year bonds.
The dollar fell to 111.60 yen yesterday, down from 113.93 Wednesday in New York. The dollar also fell to 1.5120 deutsche marks from 1.5175 marks.
Some traders said Sakakibara's remarks may signal a change in policy by Japan.
"Sakakibara is a well respected individual; he doesn't say things without a reason," said Paul Farrell, managing director of foreign exchange at Chase Manhattan Bank. "They definitely want to see a top for the dollar around 115 yen. They feel it's time to send some signals and see what they can do without spending money."
Traders pay attention to Sakakibara because he's viewed as a key architect of the 18-month slide that drove the yen to a 3 1/2 -year low of 114.92 per dollar Oct. 29. Yesterday was the first time he suggested that the yen had fallen far enough.
While a weaker yen boosts Japanese exports by making them less expensive in foreign currency terms, it raises the price of Japanese imports, such as oil, and puts upward pressure on inflation because of the import price rise.
A rising dollar makes U.S. exports more expensive in foreign currency terms. U.S. automakers have complained throughout the year that a dollar above 110 yen limits their auto sales in Japan.
Pub Date: 11/08/96