Yen Drifts Near Recent 35-year Low, Japan's Business Sentiment Decline Softens

Akira Ito
13 Jun, 2024
Tokyo

In mixed trading, market indexes lacked direction in Tokyo ahead of the Bank of Japan's monetary policy decisions on Friday. 

The Nikkei 2225 and the broader Topix index meandered around the flatline ahead of the widely anticipated Bank of Japan's decision to hold rates steady. 

In addition, investors are looking forward to Governor Kazuo Ueda's comments about the central bank's plan to purchase government bonds.

The Japanese yen weakened to 157.07 against the U.S. dollar, and the yield on 10-year Japanese government bonds hovered near 0.976%. 

The Bank of Japan is expected to hold interest rates steady, despite the recent acceleration in producer price inflation and rising inflationary pressures for consumers. 

The central bank's dovish stance is likely to weigh heavily on the yen, and the Japanese currency is expected to weaken to between 165 and 170 over the next six months. 

The Bank of Japan policymakers believe that a steady decline in the yen is the best possible outcome for the Japanese economy, supporting the price competitiveness of Japanese manufacturing products exported. 

The business survey index of large manufacturing companies fell less than expected, and forward-looking expectations rebounded, according to the survey results released by the Cabinet Office. 

The business climate index among large manufacturers declined by 1% in the second quarter after falling 6.7% in the first quarter. 

The mood improved after manufacturing companies reported solid earnings in the first quarter and ramped up domestic capital spending.

Manufacturers anticipate business conditions to improve by 9.2% in the third quarter and 10.7% in the fourth quarter. 

 

Japan Stock Movers

The Nikkei 225 Stock Average decreased 0.2% to 38,812.40, and the Topix Index fell 0.6% to 2,739.37. 

In the tech sector, Advantest, Tokyo Electron, Disco Corp., and Screen Holdings declined between 0.8% and 3.5%. 

Banks also participated in the downturn, and Mitsubishi UFJ, Mizuho Financial Group, and Sumitomo Mitsui fell more than 1%. 

Among the leading gainers, Renaissance Electronics soared 4.9% to ¥3,101.0, Taio Yuen advanced 4.3% to ¥3,793.0, and Recruit Holdings jumped 2.5% to ¥7,910.0. 

On the downside, Tokyo Electric Power, Chubu Electric Power, and Kansai Electric Power declined between 2% and 4%. 

Konica Minolta, T&D Holdings, Eisai, and Denka fell around 3%.