Tokyo stocks close down as yen strengthens
Tokyo, (MILLAT ONLINE):Tokyo stocks fell Thursday as the yen hit a four-month high after the US treasury secretary hailed a “weak dollar” at the World Economic Forum in Davos.
The benchmark Nikkei 225 index lost 1.13 percent or 271.29 points to close at 23,669.49, while the broader Topix index was down 0.88 percent or 16.67 points at 1,884.56.
“Selling pressure increased today as investors are getting concerned about the impact of the strong yen on corporate earnings,” Hikaru Sato, senior technical analyst at Daiwa Securities, told AFP.
US Treasury Secretary Steven Mnuchin said Wednesday that a “weaker dollar” was good for the United States, words that sharply lowered the value of the US currency on the markets.
“Obviously a weaker dollar is good for us, it’s good because it has to do with trade and opportunities,” the top economic official said.
Already weak since Tuesday, when US President Donald Trump signed fresh protectionist measures against China and South Korea, the dollar lost even more ground after Mnuchin’s comments.
In Asia, the dollar fetched 108.93 yen — the lowest level since September last year — down from 109.24 yen in New York after Mnuchin spoke.
The comments were widely interpreted as a green light from Washington to let the value of the dollar slide to make US exports cheaper.
In a normal scenario “the yen should get cheaper as the US Fed keeps hiking its key rates while the Bank of Japan is maintaining its monetary easing”, Masayuki Kubota, chief strategist at Rakuten Securities, said in a commentary.
“However, if US President Trump makes comments criticising a cheaper yen, the yen’s depreciation may halt,” said Kubota, noting that currency exchange rates have been affected frequently by political factors including Trump’s comments.
A strong yen erodes exporters’ profits when repatriated and often drags down the Tokyo stock markets.
Toyota fell 1.02 percent to 7,594 yen, Sony dropped 3.54 percent to 5,249 yen and Nintendo lost 1.78 percent to 47,770 yen.
Banks were also lower after the Bank of Japan this week kept its super-loose monetary policy in place, tamping down investor expectations of a move towards an exit from the stimulus.
Mitsubishi UFJ was down 1.70 percent at 853.3 yen and rival Sumitomo Mitsui Financial was down 1.19 percent at 5,146 yen.