Inter-bank deals halted

Press, 8 December 1988, Page 27

Inter-bank deals halted

By

ANNA ESAKI

NZPA-Reuter Tokyo A severe setback in Emperor Hirohito’s health earlier this week prompted some Japanese banks to stop dealing currency with one another.

“Apparnetly some banks didn’t directly deal with other banks on Monday, as they had been instructed by the Federation of Bankers Associations to deal just for customers,” said a senior manager at a Japanese bank. Like other currency market analysts and traders, he declined to be identified, indicating just how sensitive a topic the emperor’s illness and the possibility of his dying remain. The 87-year-old monarch survived the worst crisis of his 12-week critical illness on Monday after doctors gave him a massive blood transfusion and oxygen.

When the emperor dies, Japanese stock and bond markets are likely to close. Currency markets are

expected to remain open, but respect will be paid by keeping trade as subdued as possible, dealers said.

They said that when the emperor first collapsed on September 19, the Federation of Bankers Associations contacted the presidents and chairmen of Japanese banks to request that dollar-yen trading be restricted should the Japanese head of state die.

“In the event of his death, trading will be contained to only real demand,” said a dealer, such as exporters converting dollars earned abroad into yen for domestic use. A spokesman for the federation said no such formal restrictions have been made.

“There is no way of knowing what will happen when, and there is a great deal of demand,” the spokesman said. But on Monday morning, news that the emperor had lost a massive amount of blood was enough to signal to market participants in Tokyo that they should adopt a low

profile. The emperor’s condition has stabilised somewhat since then, but deailers say there is still concern. This added to sluggishness in the Tokyo market, where the dollar closed little changed in dull trading. Should the emperor take another turn for the worse, or die, most Japanese currency players will probably try to sit on the sidelines out of respect. Trading should again be subdued and light in a market where speculation is said to make up close to half of the daily volume. But market players in the United States and Europe will probably buy dollars, dealers said. “There have been a couple of times when the emperor went through a crisis, and each time people bought dollars, especially those in overseas currency markets,” said a Tokyo dealer. The emperor is more a symbol for Japan than an actual leader, but the foreign response is likely to be more emotional than rational, dealers said.