Shares hit as dollar falls further against yen

THE DOLLAR weakened against the yen for the ninth day running yesterday, declining to its lowest level since August 1996. It fell as low as 108.53 from 110.85 on Friday, writes Diane Coyle.

Fears that Japanese investors might be withdrawing funds from the US ahead of the end of the financial year on 31 March, combined with jitters about the Brazilian rescue package, also hit share prices. Although the decline was limited by a fresh surge in technology stocks, the Dow Jones index was down nearly 65 points at 9578.7 by mid-morning.

The weakness spilled over to London, where the FTSE-100 index ended above its lows but still down 62 points at 6,085.

Alan Greenspan, the US Federal Reserve chairman, told a meeting of central bank governors in Hong Kong that he thought any slowdown in the US economy would be relatively moderate.

Even so, with Japan's central bank governor telling a meeting of the Bank for International Settlements that Japan's economy has bottomed out, market sentiment shifted against the dollar. Koji Tanami, Japan's vice-finance minister, said yesterday the US had a "sense of crisis" about Brazil. It was the latest in a stream of official Japanese comments which have helped weaken the dollar.

Shares in Brazil fell 6 per cent yesterday ahead of a key vote on tax increases in Congress.