Barefoot Investor: Japanese Stocks Rise as Government Intervenes in Market to Stem Yen’s Gain

Japanese stocks advanced for the first time in three days after the government sold yen, boosting prospects for exporters earnings.

The Nikkei 225 Stock Average gained 1 percent to 9,733.10 as of 12:42 p.m. in Tokyo, after falling as much as 0.2 percent. The broader Topix index climbed 0.9 percent to 833.88. The gains were maintained on optimism the yen may weaken further should the Bank of Japan follow its Swiss counterpart and take further measures.

The stock market is reacting to the yen’s depreciation, the yen may continue to weaken “if the Bank of Japan also takes some easing measures along with other countries.

Japan’s central bank may follow the unilateral action to sell the yen with monetary stimulus.

The yen dropped against all 16 of its major counterparts, falling to 79.15 against the dollar, the lowest level since July 20, compared with 77.15 at the close of stock trading in Tokyo yesterday. Against the euro, the yen slipped to 113.09 from 109.65. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.

Exporters advanced on easing concerns the yen, which had approached a postwar high against the dollar, will hurt overseas earnings. Canon rallied 2.3 percent to 3,775 yen. Ricoh Co., an office-equipment maker which derives more than half of its revenue outside Japan, climbed 2.2 percent to 807 yen. Toyota Motor Corp. (7203), the world’s largest carmaker, advanced 2.2 percent to 3,190 yen.

Swiss Action

Switzerland, also contending with a stronger currency, unexpectedly cut interest rates and pledged to boost the supply of the franc yesterday.

In the U.S., the Standard & Poor’s 500 Index advanced 0.5 percent to 1,260.34 yesterday, snapping a seven-day decline, amid speculation the Federal Reserve may consider another economic stimulus program to prevent a recession.

The Wall Street Journal reported three former top officials at the Fed said the central bank should consider a new round of securities purchases to bolster economic growth. (Bloomberg)
Yen Plunges

The BOJ will likely expand an asset-purchase program that was first set up last year and aimed to counter Japan’s trenchant deflation.


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