Tokyo’s stock market plunged again yesterday as Asian markets vented their dissatisfaction with the inaction of Japan’s central bank and their anxiety about the rising value of the yen.
The yen was at 106.14 to the dollar, close to its highest in 18 months, after strengthening by 5 yen at the end of last week following a decision by the Bank of Japan (BoJ) not to take new measures to stimulate the economy.
A strong yen hurts Japan’s huge export industries and shares in companies such as Toyota and Sony were among yesterday’s biggest losers.
The finance minister hinted at the weekend that the government might intervene. “The yen strengthened by five yen in two days,” Taro Aso said. “So-called speculative moves are seen behind it. Tokyo will continue watching the market trends carefully and take actions when necessary.”
However, the US treasury department has placed Japan on a list of countries whose policies threaten the American economy.
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As chairman of the G7 summit this month Shinzo Abe, the Japanese prime minister, wants to avoid creating discord with his guests, particularly President Obama. He has reserved the right to intervene in cases deemed to be manipulative speculation.
The BoJ shocked the markets on Thursday by taking no new action to stimulate the flagging economy after a two-day meeting at which it had been expected to adjust interest rates or its targets for asset and stock buying. Friday was a public holiday in Japan but the long holiday has clearly done little to quell the anxiety of the markets.
“There was a gap in the communication between the BoJ and the market,” Yoshinori Ogawa, of Okasan Securities in Tokyo, said. “As we are in the middle of long holidays liquidity is thin, which makes it easier for speculators to whip markets around with their selling.”