TOKYO, DEC. 25 -- The U.S. dollar plunged to a record low on the Tokyo foreign exchange market today, closing the week at 125.20 yen, while stock prices closed lower after failing to recover from morning losses.
The dollar's closing was 1.45 yen lower than Thursday's finish of 126.65 yen. Its previous record low was reached Dec. 18, when the dollar closed at 126.45 yen.
After opening at 125.95 yen, the dollar ranged between 126.00 yen, the day's high, and 125.10 yen, the U.S. currency's lowest point in Tokyo since modern exchange rates were established in the late 1940s.
Tokyo was the only major financial center open today, as markets in other countries closed for Christmas.
Traders said the dollar's plunge reflected market leanings toward further declines in the value of the U.S. currency against the Japanese yen.
"Despite a recent joint statement by the Group of Seven major monetary nations, there still remains a persistent and strong sentiment in the market that the U.S. government was allowing the dollar to slip further," said Nobuyuki Ueda, a senior economist at the Japan Long-Term Credit Bank.
The G-7 statement, issued Wednesday, pledged continued efforts to coordinate economic policies among its member nations and keep exchange rates stable, but many traders have said it produced no new policy moves to support the dollar.
"On a long-term basis, there still remains a market consensus for the dollar's further slide," said Seichiro Hirata of the Bank of Tokyo. "Under such circumstances, there was little expectation for the dollar's recovery with selling outnumbering buying in a thin trading."
However, Finance Minister Kiichi Miyazawa brushed off the dollar's slide today because it came during thin holiday trading.
"It's not such a big thing," he said.
The Bank of Japan intervened modestly in the afternoon session, although remained at the sidelines in the morning.
On the Tokyo Stock Exchange, the 225-issue Nikkei Stock Average slipped after a slight recovery in the afternoon to finish trading at 22,120.94, down 422.43 points. In the morning, the market's key barometer shed 525.79 points.
"The stock market turned bearish in the afternoon because of the dollar's renewed decline" against the yen, said Toshiki Yamanaka of Nomura Securities.
"Time was running out before the market recovered ground lost in morning session," Yamanaka said.
A total of 550 million shares were traded on the Tokyo's Stock Exchange's major first section.