Yen sinks against dollar

Yen sinks against dollar

LONDON (AFP): The yen hit a five-year low against the dollar in trading on European markets early yesterday after new slides in Asian currencies and a report highlighting a drop in Japanese business confidence.

In early trades here, the dollar rose to 131.33 yen in London (130.43 yen) but slightly down from the closing rate of 131.35 in Tokyo.

The German mark rose to 74.04 yen from 73.56 at the end of trading last week.

"Asia continues to collapse ... reaching new lows, which had weighed down the yen," Union Bank of Switzerland analyst Peter von Maydell said.

The Indonesian rupee fell through the 5,500 barrier against the dollar on Monday, while the Thai baht sank to a historic low of 46 to the dollar.

Analysts said that the Bank of Japan's quarterly "Tankan" report had highlighted the nation's troubled economy, its financial market worries and the turmoil in southeast Asia, putting more pressure on the government to act to avert a further slump.

Business confidence dropped in December with the diffusion index for large manufacturers falling from plus three to minus 11, the Bank of Japan said in a quarterly report on Monday.

Meanwhile, sterling slightly lost ground against most currencies except the yen.

The dollar showed little change against the mark, with the market expecting the US Federal Reserve to maintain interest rates at current levels when it meets on Tuesday.

The Spanish peseta showed no reaction to a cut in the Bank of Spain's base interest rate from 5 percent to 4.75 percent.

The mark made progress against the French franc.

The dollar was being traded at 1.7742 marks from 1.7732 late on Friday, 131.33 yen (130.43), 1.4355 Swiss francs (1.4333) and 5.9440 French francs (5. 9394).

The mark traded at 3.3502 French francs (3.3489), 980 Italian lira (unchanged), 84.57 pesetas (84.54), 0.8090 Swiss francs (0.8083), 74.04 yen (73.56).

The pound was being traded at 1.6417 dollars from 1.6503, 2.9141 marks (2. 9285), 215.84 yen (215.26), 2.3581 Swiss francs (2.3671), and 9.7648 French francs (9.8021).

Gold began the week quietly yesterday, firming on its Friday close amid mixed pictures for the rest of the precious metals complex.

Gold fixed at $283.20 an ounce in the morning, up a little on Friday afternoon's $283.00, the low since August 6, 1979.

Platinum weakened slightly on Monday, last quoted at $356.50/$358.50 an ounce, down $4.50 on its London close.