The Japanese foreign exchange market reopened this morning after a three-day weekend to find the yen suddenly at its strongest level in 15 months.
That strength, in turn, provoked record trading that slightly weakened the yen by day's end.
It closed at 230.1 to the dollar at 3:30 p.m. this afternoon, with dealers and economists here making contradictory predictions about its course in the near future.
Some said it had been strengthened artificially by panic selling of dollars all over the world after news Sunday of a campaign to weaken the dollar by Japan, France, Britain, the United States and Germany. They suggested it would now weaken toward 235.
"It is always hard to maintain something artificial," a dealer at a major Japanese bank remarked. But other exchange specialists predicted further strengthening.
The yen opened this morning at 229.7, its strongest level since June 1984. The 12.3 yen difference between the 242 closing price in the previous trading session, Friday, was the Tokyo market's biggest "overnight" fluctuation since the era of floating rate currencies began in 1973.
However, bankers noted that the drop might have been compounded because Monday was a national holiday in Japan. Markets were closed here while trading went on in Europe and the United States.
A record $4.734 billion was traded here today, the Ministry of Finance reported. At one point, the yen strengthened further from its opening rate to 228.2 yen, before being driven to the closing rate of 230.10, slightly weaker than its value at opening.
Downward pressure on the yen came from oil importers and trading houses that sold yen to buy dollars they need for foreign transactions, dealers said. That appeared to reflect a confidence that the dollar is in a trough and will not weaken further against the yen.
The strong dollar-weak yen relationship has emerged as an important point of friction between the United States and Japan. Because it makes foreign goods cheaper to Americans, it is blamed for much of the U.S. trade deficit with Japan, which was $37 billion in 1984 and growing larger this year.
Japan officially favors steps to weaken the dollar and strengthen the yen to patch up relations with the United States and other trading partners. However, this trend would mean exchanging export earnings for good will, leading some foreign officials to suggest Japan's heart is not in it.
On Sunday, at a meeting in New York, cabinet members in charge of finance and central bankers from the United States, Japan, Britain, West Germany and France agreed that the dollar was overvalued and pledged steps to achieve balanced, low-inflation growth.
Japan specifically pledged to continue liberalizing its financial markets and to try to stimulate domestic demand. Both steps are supposed to strengthen the yen against the dollar in the long term.
However, the communique' appears to have been widely interpreted in world foreign exchange markets as a threat that the five countries' central banks will intervene with behind-the-scenes buying and selling to drive the dollar down.