TOKYO DEALERS SEE DOLLAR POISED TO BREACH 140 YEN Tokyo's foreign exchange market is watching nervously to see if the U.S. Dollar will drop below the significant 140.00 yen level, dealers said. "The 140 yen level is key for the dollar because it is considered to be the lower end of the reference range. If the currency breaks through this level, it may decline sharply," said Hirozumi Tanaka, assistant general manager at Dai-ichi Kangyo Bank Ltd's international treasury division. The dollar was at 141.10 yen at midday against Friday closes of 142.35/45 in New York and 141.35 here. The dollar opened at 140.95 yen and fell to a low of 140.40. It was 1.7733/38 marks against 1.7975/85 in New York and 1.8008/13 here on Friday, after an opening 1.7700/10. The currency's decline was due to remarks on Sunday by U.S. Treasury Secretary James Baker, dealers said. "The dollar fell over the weekend on increased bearish sentiment after Baker's comments," said Dai-ichi's Tanaka. He said this stemmed from mounting concern that cooperation among the group of seven (G-7) industrial nations to implement the Louvre accord to stabilise currencies might be fraying. The dollar's fall was also prompted by a record one-day drop in the Dow Jones industrial average on Friday and weakness in U.S. Bond prices, dealers said. Baker said the Louvre accord was still operative but he strongly criticised West German moves to raise key interest rates. Operators took Baker's comment to indicate impatience with some G-7 members for failing to stick to the Louvre accord due to their fears of increasing inflation. Rises in interest rates aimed at dampening inflationary pressures also slow domestic demand. West Germany and Japan had both pledged at G-7 meetings to boost domestic demand to help narrow the huge U.S. Trade deficit, Tanaka said. U.S. August trade data showed the U.S. Deficit at a still massive 15.68 billion dlrs. But if West Germany raises interest rates, this would run counter to the pledge, he said. "Operators are now waiting to see if the G-7 nations coordinate dollar buying intervention," said Soichi Hirabayashi, deputy general manager of Fuju Bank Ltd's foreign exchange department. The target range set by the Louvre accord is generally considered to be 140.00 to 160.00 yen, dealers said. "The market is likely to try the 140 yen level in the near future and at that time, if operators see the G-7 nations failing to coordinate intervention, they would see the Louvre accord as abandoned and push the dollar down aggressively," Hirabayashi said. He said the U.S. Currency could fall as low as 135 yen soon.