8 November 2001, 08:43 Forex - Dollar easier in midafternoon Tokyo on lack of follow-through buying
TOKYO (AFX-ASIA) - The dollar turned easier against the yen in
midafternoon trading on a lack of follow-through buying, after having
risen earlier in the day on concerns over the soundness of Japan's
financial system, dealers said.
Earlier, the dollar reached a high of 121.38 yen, as the steep fall
in the share price of Asahi Bank sparked serious fears over the bank's
financial condition as well as over the broader banking sector, they
said.
Asahi Bank president Yukio Yanase said at an emergency press
conference that the sharp declines in the bank's share price appeared
to be due to selling of large lots by foreign investors, followed by
further offloading by speculative investors.
"Considering the bank's PER (price-earnings ratio) of 7.56 times
and PBR (price-to-book ratio) of 0.28 times, our shares are oversold to
an abnormal extent," he said.
Hachijuni Bank foreign exchange dealer Naoya Kozu said currency
investors, in general, are more anxious about the situation of Japanese
banks than are equity market investors, but "are still motivated to
test the strength of the Japanese authority's commitment to prevent a
sharp appreciation of the yen."
Finance Ministry senior deputy director-general Zenbei Mizoguchi
said earlier that the ministry is ready to take appropriate action in
the market against any signs of excessive strength of the yen against
the dollar.
"If the mid-120 yen level is broken, the next support for the
dollar will be around the 119.70 yen level, although there is a chance
that by the time the dollar reaches such a level, the authority may
take some action," Hachijuni Bank's Kozu said.
Investors refrained from accumulating new positions ahead of
today's policy meeting of the European Central Bank, which is widely
expected to decide on a 25-basis-point rate cut, dealers said.
But Kozu noted that "a 25-basis-point rate cut alone will not be
able to revive the market's confidence in the ECB's policy management."
"Therefore, the euro will not be able to consolidate the 0.90 usd
level just on a 25-basis-point rate cut alone."
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