The dollar narrowed losses against the Japanese yen and ended slightly lower Tuesday in Tokyo following approval by the U.S. Senate of a deficit reduction plan. Share prices erased early gains and fell. The dollar ended the day at 129.95 yen, down 0.10 yen from Monday's 130.05-yen close. It opened lower at 129.65 yen and ranged between 128.95 yen and 130.35 yen. Tuesday's close was the lowest since Mar. 15, 1989, when the dollar closed at 129.88 yen. The 225-issue Nikkei Stock Average lost 134.89 points, or 0.57 percent, ending at 23,495.11. The index at late afternoon fell about 550 points from the day's high before narrowing the losses toward the end of the afternoon session, traders said. They said the index fell as market players, discouraged by the slowdown in the yen's surge against the dollar, started selling issues. Meanwhile, the dollar inched up in mixed trading after opening lower following a ``substantial amount'' of dollar selling in the Sydney market, which opens earlier than Tokyo, dealers said. They said the dollar turned upward in the late morning when the Bank of Japan made ``rate check'' phone calls to some Japanese banks. A rate check does not involve any market activity, but is a tactic the central bank uses to make banks voluntarily refrain from too much dollar selling. Also, reports that the U.S. Senate gave final approval to a $500 billion deficit-reduction plan helped support the dollar, said Yoshikazu Kuroda, a dealer with Fuji Bank. The Senate passed an emergency bill on a voice vote Monday night that would let the government open normally Tuesday morning and the House concurred, 362-3. The vote came just as dollar trading closed in Tokyo. The White House said President Bush would sign the legislation and that all federal employees should report to work as scheduled. But the dollar will remain weak despite temporary fluctuations, according to Toru Kanai, a foreign exchange analyst with New Japan Securities Co. ``There are no positive factors to encourage dollar buying now,'' he said. ``In addition to already serious worries over the U.S. economy, market players are heavily discouraged by the House's disapproval of the budget plan,'' Kanai said. Expectations that the Federal Reserve Board will lower interest rates are also depressing the dollar, dealers said.
