The US dollar surged in trading against the yen after a top investors service announced it was studying whether the Japanese government's bond rating should be dropped another notch. Moody's warned that public debt in Japan was approaching a level - 150 percent of gross domestic product - not seen in the industrialized world since the Great Depression. That, the agency said, would require damaging cuts in government spending and would threaten an economy still struggling to emerge from recession. In 1998, Moody's lowered Japan's debt rating from AAA, the highest, to Aa1, rattling the Tokyo government as well as financial markets. Yesterday's warning propelled the dollar to 110.08 against the yen on the Tokyo exchange, its highest level since last September.
Wholesale prices held steady last month overall, the Labor Department said in reporting its producer price index, which measures inflation pressures before they reach the consumer. While cigarette prices fell by 4.9 percent in January, the steepest decline since August 1993, energy prices rose by a solid 0.7 percent, and airplane prices rose 1 percent for the biggest gain in five years. Outside the volatile energy and food categories, the index dipped 0.2 percent, the largest fall since October 1994.
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