THE dollar soared against the yen to its highest level in nearly two years in Europe yesterday as equity markets underlined their boisterous start to 1996. Huge demand from both Irish and international investors drove the Irish stock market to another new high and further gains are expected by brokers.
After heavy trading, the Irish market gained almost 1 per cent and the ISEQ Overall Index closed up 20 points on 2,290 with an expectation that the 2,300 barrier may be breached today.
Tokyo stocks leapt 3.77 per cent on the first trading day of the year in Japan and the London, Frankfurt and Norwegian markets hit record intra-day highs.
Traders in Tokyo returned from a long New Year's holiday and immediately picked up buying the dollar, which has rallied in the United States and Europe in recent weeks.
With Japanese capital looking for higher returns outside Japan, the yen weakened in Asian trading and that spilled over into Europe and the United States.
The US currency saw its gains accelerate after Tokyo catapulted it through its 1995 high amid buying from US and Japanese funds. The dollar was quoted at 106.38 yen by late yesterday, just below its peak of Y106.45 - its highest point since March 1994 and two yen higher than Wednesday's late European level. In Dublin. the pound lost over half a cent to $1.5949.
The German Bundesbank, as expected, left German interest rates unchanged when its policymaking council met.
The London stock market also touched record levels during the morning but failed to capitalise on Wall Street's firm start and ended mixed. US shares later fell back. The FTSE 100 index ended off 1.5 points at 3.714.1 but the Mid-250 index rose as investors switched from the blue chips after several days of strong rises.
