JAPAN: Japanese stocks at 16 month lows, yen hits 15 year high against the dollar

Record ID: 1532527

  • Title: JAPAN: Japanese stocks at 16 month lows, yen hits 15 year high against the dollar
  • Date: 26th August 2010
  • Summary: TOKYO, JAPAN (AUGUST 25, 2010) (REUTERS) TOKYO FOREIGN EXCHANGE TRADING OFFICE WORKERS AT TOKYO FOREIGN TRADING TOKYO FOREIGN EXCHANGE TRADER VISIBLE BETWEEN A U.S. AND JAPANESE FLAG ELECTRONIC STOCK BOARD SHOWING EXCHANGE RATE AT 84.40 YEN TO THE U.S. DOLLAR MORE OF TRADERS AT WORK
  • Embargoed: 10th September 2010 02:01
  • Keywords:
  • Location: Japan
  • Country: Japan
  • Topics: Finance
  • Reuters ID: LVA97CR7ZYR6UTO5WF579I2KY7A0
  • Aspect Ratio: 4:3
  • Story Text: Japan's Nikkei average fell to its lowest in 16 months on Wednesday (August 25) after the yen hit a 15-year high versus the dollar as dismal U.S. housing data added to fears the global economic recovery would fizzle out.
    But market players said hopes for action by the government and the Bank of Japan are providing support after the Nikkei business daily reported that the Japan's Ministry of Finance may consider unilateral yen-selling market intervention if speculators drive up the yen.
    The Nikkei stayed below 9,000, having broken below the level for the first time since May 1, 2009 the day before.
    The 9,000 to 9,100 area had seen strong support since last year, and a break below that would likely feed downward momentum, market players said, with few technical targets to break the benchmark's fall.
    The benchmark Nikkei slipped 0.9 percent to 8,915.68, after falling as low as 8,888.65, its lowest since May 1, 2009. The broader Topix dropped 0.9 percent to 810.73.
    Pessimism about global growth has grown infectious in recent weeks after lacklustre U.S. employment and consumer reports. Fears were reinforced on Tuesday (August 24) by a report showing U.S. existing house sales slid much more than expected in July after the government ended homebuyer tax credits.
    U.S. stocks fell to their lowest level in seven weeks, while prices of U.S. Treasuries soared, sending two-year yields to another record low.
    "If you add in to the picture speculators, I believe excessive moves will negatively affect the Japanese real economy and possibly even the stability of Japanese companies. So we need to be extra cautious about the situation," Japan's top government spokesman told reporters on Wednesday.
    In early Asian trading, the dollar recouped some ground to 84.40 on electronic trading platform EBS after hitting a 15-year low around 83.60 yen.
    The yen may hold near 15-year highs against the dollar around the 80-85 zone in coming months as a confluence of factors play in favour of the Japanese currency despite the country's weak economy, traders said.
    Japan's focus on hedging any purchases of U.S. Treasuries, the downward dollar pressure from falling U.S. yields, the prospect of more Federal Reserve easing and the Bank of Japan's inaction on deflation all suggest the yen can remain strong.
    The yen's climb to a 15-year peak against the dollar and a nine-year high against the euro has spurred a barrage of warnings from Japanese officials about the dangers to the country's exporters and fragile economy.
    However the Bank of Japan has showed no inclination to fight the deflationary forces gripping the Japanese economy, even as the Fed looks poised to increase quantitative easing, and many market watchers believe it has little power to turn the tide anyway.
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