Dollar Hits Low Against Yen

xLONDON -- The dollar came under renewed pressure Monday, sliding below 100 yen to set post-war lows against the Japanese currency, as central banks kept their powder dry for another day. The dollar flirted with the 100-yen barrier all day and finally slid below it -- although not decisively -- in the European afternoon. In New York, the dollar sank to 99.60 yen, breaking through the low of 99.85 yen set there last Tuesday. The battered U.S. currency earlier hit a post-war low of 99.50 yen in Tokyo despite massive Bank of Japan buying support of $1 billion. The U.S. Federal Reserve and the other central banks who joined in a $3 billion intervention to aid the dollar with only brief effect on Friday made no move to repeat the dose. And the Fed also did nothing to boost American short-term interest rates, despite market speculation that this was the easiest immediate way to avoid a full-scale dollar crisis and restore bond and stock markets to some stability. The dollar was also weak against the Deutsche mark, falling to a new 1994 low of 1.5725 marks from 1.5850 on Friday. "The market's been giving the dollar a little push all day to see what resistance it will come up against ... and trying to get the central banks to come out and play," said Carlo Galazzi, the foreign exchange manager at Nikko Bank in London. World stock markets, faced with continued uncertainty of a weak dollar that will hurt German and Japanese export trade with the United States, were in a gloomy mood most of the day. But the London market began to claw its way back to the plus column in mid-morning as buyers sensed that key shares offered good value after the market's huge 20 percent slide since its February peak. A 31-point fall was quickly erased and the FTSE-100 index ended 23 points ahead. "People are very hesitant," said Nick Edwards of Yamaichi International in London. "Big institutions are watching very patiently and waiting. They believe there is value there." U.S. stocks stabilized at modestly firm levels in late-morning trading, as investors looked for bargains after last week's sell off. The Dow Jones industrial average, after being down 26 points in the first half-hour, added nine to 3,646. Dollar weakness dragged German bonds and shares lower in thin trading but the market later halved its losses, although some analysts said the trend was likely to be short-lived. Tokyo stocks plunged to a six-week closing low after the dollar's dive below 100 yen and the resignation of Japanese prime minister Tsutomu Hata. The Nikkei closed down 465.79 points, or 2.24 percent, at 20,300.96. The markets are looking for more intervention or a possible rise in short-term U.S. interest rates to take pressure off the dollar. The central bank has raised interest rates four times this year in an effort to slow U.S. economic growth to more sustainable levels and head off future inflation.