NextGen Day

On Thursday in Tokyo, the yen continued to be under pressure versus the US dollar around the upper 146 regions as expectations of rapid monetary tightening by the Federal Reserve persisted in the wake of a stronger-than-expected US producer price index (CPI).

As US producer prices data on Wednesday stoked optimism that the nation’s consumer price index data will be strong, the yen traded in the upper 146 range in Tokyo after approaching the 147 lines versus the dollar overnight in New York, according to traders.

A robust CPI might fuel additional rumors that the Fed would impose a second 0.75 point rate hike in December, higher than the current expectation of a 0.50 point increase, they added. The market has already priced a 0.75 percentage point rate hike in November.

Yukio Ishizuki, a senior foreign exchange analyst at Daiwa Securities Co., says, “if the CPI reading turns out to be greater than predicted, the yen may fall to its next milestone against the dollar” in the upper 147 area, a level not seen in around 32 years.

The dollar was worth 146.83–84 yen at 5 p.m., compared to 146.87–97 yen in New York and 146.16–19 yen in Tokyo at the same time on Wednesday.

In Tokyo late on Wednesday afternoon, the euro was quoted at $0.9706-9708 and 141.88-92 yen, compared to $0.9696-9706 and 142.43-53 yen in New York.

After Bank of Japan Governor Haruhiko Kuroda stated on Wednesday that Japan needs to maintain monetary easing to maintain its 2 percent inflation stable and sustainably, the yen was also sold.

Dealers argued that his comments highlighted how the BOJ’s policies differ from those of other significant central banks, raising interest rates to combat growing inflation.

The latest warning from Finance Minister Shunichi Suzuki, who stated in Washington on Wednesday that Japan will take “decisive” steps against erratic currency market movements, received no response from the markets.

As investors prepared for releasing September US inflation data later in the day, Tokyo equities ended lower for the fourth straight trading session.

The 225-issue Nikkei Stock Average finished the day at 26,237.42, down 159.41 points or 0.60 percent from Wednesday. At 1,854.61, the Topix index lost 14.39 points or 0.77 percent.

Air transportation, service, electric power, and gas problems lead to a decline in the elite Prime Market.

According to economists, stocks fell amid ongoing worries about the direction of the US economy as a result of the Fed’s relentless monetary tightening.

It costs more for businesses and consumers to borrow money when interest rates are higher.

Brokers reported that several sectors, including air carriers and concerns related to the service sector, had been sold off recently.

ANA Holdings, the parent company of All Nippon Airways, lost 84 yen, or 2.9 percent, to 2,823 yen, while Japan Airlines lost 79 yen, or 2.8 percent, to 2,710 yen.

According to rumors, the Japanese conglomerate has chosen a group of businesses led by a Tokyo-based fund as the preferred bidder for its potential buyout, with 2.8 trillion yen ($19 billion) being the targeted purchase price. Toshiba, meanwhile, increased 379 yen, or 7.4 percent, to 5,512 yen.

49 issues in the Prime Market closed unchanged while declining issues outpaced advancing items 1,447 to 341.

From 1,164.94 million shares traded on Wednesday, the Prime Market decreased to 1,042.87 million shares.

The yield on the benchmark 10-year Japanese government bond remained constant from its closing position on October 5 at 0.245 percent until Wednesday, when trading resumed.

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