The local stock exchange rose on Tuesday as investors awaited the reopening of US markets…
For the first time in 24 years, the yen slips to the 144-zone against the dollar.
On Wednesday, the yen dropped to a fresh 24-year low versus the US dollar as investors continued to dump the Japanese currency in expectation of rising US interest rates.
As investors became apprehensive about a downturn in the world’s largest economy and the global economy due to the US Federal Reserve’s tightening of monetary policy, Tokyo equities sank in the morning.
The 225-issue Nikkei Stock Average decreased by 263.68 points (0.95 percent), or to 27,362.83 on Tuesday. At 1,911.78, the larger Topix index was down 14.79 points, or 0.77 percent.
Mining, marine transportation, and electric appliance problems were the main decliners on the exclusive Prime Market.
Stronger-than-expected US non-manufacturing statistics from the Institute for Supply Management boosted the possibility that the US central bank will continue with aggressive interest rate hikes, dealers said, and the Japanese yen stayed weak after breaching the 143 barriers in New York overnight.
“Solid data convinced investors that the Fed would maintain its hawkish approach. and could raise rates by 0.75 percentage points later this month, “said Senior international exchange strategist Yukio Ishizuki of Daiwa Securities Co.
Despite warnings from Japanese government officials against the yen’s rapid depreciation and a threat to take necessary measures if steep dips in the currency continue, the yen fell further, falling to 144 to the dollar in the early afternoon.
Ishizuki said that the “momentum” of dollar purchases, which began on Tuesday when the currency was trading at 140 yen, will likely last for some time.
The dealers stated that domestic importers also purchased dollars for settlement.
In comparison to 142.74-84 yen in New York and 141.53-55 yen in Tokyo at 5 p.m. Tuesday, the dollar was worth 143.69–71 yen at noon. The yen lost more ground just after noon, reaching the 144 region.
In Tokyo late on Tuesday afternoon, the euro was quoted at $0.9975-9976 and 141.18-22 yen, compared to $0.9902-9912 and 141.33-43 yen in New York.
Concerns that a rise in interest rates will make it difficult for US companies and consumers to borrow money may cause Japanese equities to decline, matching overnight losses on Wall Street.
The tech-heavy Nasdaq index was negatively impacted by an increase in long-term US Treasury yields following the ISM report, which led to selling in their Japanese counterparts as well, according to analysts.
Tokyo Electron, a semiconductor equipment manufacturer, lost 980 yen (2.3%) to 41,720 yen, while Advantest lost 160 yen (2.1%) to 7,560 yen.
Screen Holdings, a manufacturer of chips, was down 210 yen, or 2.3 percent, at 8,980 yen.
However, a weaker currency continued to support some exporters. Subaru increased by 81.0 yen (3.3%) to 2,571.0 yen, and Mazda Motor increased by 28 yen (2.4%) to 1,212 yen.
49 issues in the Prime Market closed the morning unchanged while declining items surpassed advancing issues 1,517 to 271.
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