TOKYO: The yen’s surge to multi-month highs pummeled Tokyo stocks Monday as the benchmark index dropped more than three percent in holiday-thinned trade.
The sell-off came after the Bank of Japan (BoJ) last week shocked markets by holding off fresh stimulus — sending the yen soaring — despite signs that growth in the world’s number three economy was faltering.
Markets had widely expected new measures to counter the downturn, and the decision Thursday sent the Nikkei 225 index plunging. Friday was a public holiday in Japan.
The yen’s surge dented shares of Japanese exporters such as Toyota and Honda since it reduces the value of overseas profits and makes them less competitive overseas.
At the close, the Nikkei slumped 3.11 percent, or 518.67 points, to 16,147.38, while the Topix index of all first-section shares lost 3.03 percent, or 40.59 points, at 1,299.96.
“To sum it up in a single phrase, there was a gap in the communication between the BoJ and the market,” Yoshinori Ogawa, a market strategist at Okasan Securities, told Bloomberg News. “There are concerns the yen may strengthen beyond 105 per dollar. 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.”
The dollar took a break from its slide Monday, fetching 106.56 yen against 106.31 on Friday in US trade, its lowest level since October 2014.
But it is still down sharply from 108.58 yen in Tokyo in the wake of the central bank decision. It was above 111 yen earlier last week.
Toyota shares dived 3.74 percent to 5,442.0 yen and rival Honda dropped 3.97 percent to 2,873.5 yen.
Nissan fell 4.95 percent to 950.5 yen after new figures showed its mini-car sales in Japan tumbled by half last month.
The drop was an apparent reaction to news that vehicles Mitsubishi Motors produced for Nissan had carried falsified fuel-efficiency numbers.
Mitsubishi, whose domestic sales also tumbled by about 50 percent after the stunning revelation, has admitted to cheating on fuel-economy tests for years.
However, its shares, which have been brutalised since the crisis erupted, rose 2.67 percent to 461 yen on Monday.
Oil-linked stocks traded sharply lower, with energy explorer Inpex falling 3.76 percent to 854.8 yen and JX Holdings off 2.40 percent at 459.3 yen.
Crisis-hit Takata nosedived 9.24 percent to 373 yen after reports that said more than 100 million vehicles equipped with air bags made by the company are likely to be subject to global recalls, up from the current 60 million.
The auto parts giant has been hammered by a crisis involving an air bag defect blamed for at least 11 deaths.
Tokyo equity markets will be closed again for public holidays from Tuesday through Thursday this week. AFP