Japan fears ECB euro intervention

13 April 2012

JAPANESE equities traded nervously today as market watchers tried to decide which way the wind was blowing on the crucial foreign exchanges.

As many exporters lost ground amid fears about a stronger yen, a senior policymaker in Tokyo defended the Asian State's record dollar-buying interventions. And, critically, speculation mounted that the European Central Bank - guardian of the single currency - may now be poised to step in to the forex markets itself to try to restrain the buoyant euro.

The Nikkei 225 shifted sideways, down just 8.97 points to 10,548.72. Within the index, though, plenty of exporters were sold off as concerns persisted that a steely yen would undercut sales and profits.

Tyremaker Bridgestone gave up seven yen or 0.4% to 1569, office equipment maker Canon dropped 100 yen or 2% to 5040, and hi-tech product group Toshiba traded at 427 yen, softer by eight yen or 1.8%.

Mindful of such losses, Tokyo has over the past year sold a record amount of yen for dollars to try to cap its own currency's rise.

Such concerted action runs counter to the public statements from the Group of Seven industrial States, but Tokyo views it as a key plank in sustaining its nascent economic recovery.

Today Finance Minister Sadakazu Tanigaki stepped forward to defend the massive yen sales, saying that firing the Government big guns offered essential cover for the country's top corporations.

Tanigaki said: 'Rapid moves in foreign exchange have a significant impact on corporate earnings. By soothing market sentiment and controlling speculation, we are helping to ease the negative impact on the real economy.'

In the past 13 months Tokyo has sold about 27 trillion yen (£140bn) for dollars. Despite that, the dollar has continued to slide against the yen and one greenback now fetches 105.42 yen, its weakest showing in three years.

Fuji Heavy Industries, up five yen or 1% at 486, has led to exporters' calls on the issue, warning that any yen appreciation beyond 100 yen to the dollar would be a 'heavy blow'.

The protracted fight led by Tokyo has stirred speculation that the ECB may now also act as the euro forges towards another record high against the dollar.

Mobile player NTT DoCoMo dipped 1000 yen or 0.5% to 223,000 as the battle for US player AT&T Wireless heated up. DoCoMo holds 16% of the US group, which is facing rival bids from Britain's Vodafone and Cingular, America's second-largest mobile company.

Hong Kong shares pushed ahead, sustained by hopes the current earnings season would continue to provide positive surprises.

Global bank HSBC, which reports on the first day of next month, picked up HK$1 or 0.8% to HK$127, level with its recent 52-week high.

Cheung Kong Infrastructure, the building and power group controlled by billionaire Li Ka-shing, added 10 cents or 0.5% to HK$19.90 as it merged its concrete unit with

Britain's Hanson.

The Hang Seng index added 87.9 points or 0.6% to 13,827.7. Although the economy is picking up speed, the lead benchmark has risen less than 1% since the start of the year.

Australia's Commonwealth Bank slipped 88 cents or 2.8% to A$31.32.

The All Ordinaries index dropped 9.7 points or 0.3% to 3,338.1 with profit-taking in miner BHP Billiton. It was off 11 cents or 0.9% to A$11.78.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in