Japan Stocks Rebound, The Decline In Yen Raises the Risk of Another Market Intervention

Akira Ito
25 Jun, 2024
Tokyo

The weakness in the yen supported the broader market advance for the second consecutive session on an improved profit outlook for the companies in the export sector. 

The Topix index soared nearly 2%, and the Nikkie 225 index advanced 1%. 

Investors also looked ahead to the release of retail sales, industrial output, and jobless rate data later in the busy week of economic updates. 

Market indexes in Tokyo have faced persistent selling pressure amid growing uncertainty about the Tokyo Stock Exchange's drive to convince its member companies to accelerate corporate governance reforms. 

Moreover, the persistent decline in the yen is also weighing on the market. While the cheaper yen is likely to boost the bottom line of exporting companies, in the long run, the yen's weakness is likely to fuel inflation and dampen consumer spending. 

The yen edged down to 159.43 against the U.S. dollar, the level that generally prompts the Bank of Japan to conduct market intervention. 

The yen drifted lower after the latest Bank of Japan's policy meeting minutes showed members are divided about the future course of the rate path. 

In addition, the Bank of Japan is committed to keeping purchasing Japanese government bonds at the current rate until the next meeting in July. 

About a month ago, the Bank of Japan spent near $62 billion on forcing the yen back to 153 after the currency dropped to 158, a three-decade low in late April. 

However, the central bank is not likely to conduct market intervention in the near future and may let the currency find its lower low, which could be around 163. 

 

Japan Stock Movers 

The Nikkei 225 stock average added 1% to 39,186.38, and the Topix index advanced 1.8% to 2,788.22. 

Automobile exporters were among the leading gainers after the yen approached a 34-year low. 

Toyota Motor, Nissan Motor, and Honda Motor advanced between 1% and 3%. 

Mitsubishi UFJ, Mizuho Financial, and Sumitomo Mitsui Financial gained between 1% and 5%. 

SoftBank, Advantest, Tokyo Electron, and Screen Holdings declined between a loss of 0.3% and a gain of 0.4%.