Nikkei Gains on Forex Intervention in Tokyo

Chandrasekhar Atreya
15 Sep, 2010
New York City

Stocks in Japan surged more than 2% after the government intervened in the foreign exchange market. Prime Minister Kan plans to reshuffle the cabinet and change the DPJ executives later this week. Convenience store operator Lawson plans to open 130 stores in China.

[R]5:00 PM Tokyo, Japan – Stocks in Japan surged more than 2% after the government intervened in the foreign exchange market. Prime Minister Kan plans to reshuffle the cabinet and change the DPJ executives later this week. Convenience store operator Lawson plans to open 130 stores in China.[/R]

Japanese stocks climbed to a one-month high after the government decided to intervene to weaken the yen.

The Nikkei 225 Stock Average gained 2.34% or 217.25 to close at 9,516.56. The broader Topix also gained 1.7% to close at 848.64

Of the 225 stocks in the Nikkei 207 gained, 8 declined and 10 were unchanged.

The government and the Bank of Japan unilaterally intervened in the foreign exchange market Wednesday morning, causing the yen to weaken sharply. The coordinated move comes after the government and Bank of Japan acted to prevent the economy from weakening further and send a strong signal to financial markets.

This was the country’s first market intervention since March 16, 2004.

The government and the ruling Democratic Party of Japan will reshuffle the Cabinet and party executives later this week, said Chief Cabinet Secretary Yoshito Sengoku Wednesday.

Chief Cabinet Secretary Yoshito Sengoku admitted Wednesday morning that the government has set 82 yen per dollar as the exchange rate at which currency market intervention will be conducted.

“Asked at a press conference whether 82 yen to the dollar was the rate at which the Finance Ministry and Bank of Japan need to take action, Sengoku said “Mr. Noda probably thought that way”, referring to Finance Minister Yoshihiko Noda.

Sydney-based Pengana Capital Ltd said Wednesday it plans to boost its holdings of Japanese equities after that country’s government intervened in the foreign exchange market for the first time since 2004.

JS Group Corp said Wednesday it has signed a basic agreement with Chinese electronic company Haier & Co to form a joint venture to sell construction materials in China by the year end.

“We can offer high-quality and reasonable priced products using Haier’s customer and service networks,” said JS Group Chairman Yoichiro Ushioda at a press conference in Tokyo.

Tokyo-based Lawson Inc, Japan’s second-largest convenience store operator, plans to open 130 outlets in China next year to capture some of the increased spending as rising disposable incomes rise in the country.

“Lawson will boost capital spending by as much as five times to $50 million next year to add stores in the Chinese cities of Chongqing and Shanghai and we may also enter Beijing Dalian, Chengdu and Shenyang, President and CEO Takeshi Niinami said in an interview in Tianjin Tuesday.