Nikkei up over 3pc after dollar tops 100 yen

PUBLISHED : Friday, 10 May, 2013, 10:43am
UPDATED : Friday, 10 May, 2013, 10:46am


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Tokyo stocks jumped more than three per cent on Friday morning following the dollar’s surge past the 100 yen mark overnight, underscoring the Japanese currency’s sharp decline in recent months.

The benchmark Nikkei 225 index rose 3.09 per cent, or 438.99 points, to 14,630.47 in mid-morning trading, while the broader Topix index of all first-section shares was up 2.26 per cent, or 26.70 points, to 1,208.50.

Tokyo’s surge came as the US dollar topped 100 yen for the first time in more than four years in Thursday forex trading as Tokyo’s aggressive stimulus efforts to reflate the world’s third-largest economy continue to depress the country’s currency.

The greenback added to its gains in mid-morning Asian trade Friday, changing hands at 101.13 yen against 100.55 yen in New York Thursday afternoon.

“The dollar’s breach of the 100 yen level is iconic and will automatically draw more interest to Japan as a potential equity investment destination,” a fund manager at a foreign asset management company told Dow Jones Newswires.

Japanese Prime Minister Shinzo Abe has vowed to drag the country out of a years-long deflationary spiral with a policy of big government spending and aggressive central bank monetary easing, which tends to weigh on the yen.

Falling prices have plagued Japan for years, crimping private spending and business investment and translating into tepid economic growth.

The dollar’s gain followed US jobless claims figures, a sign of the pace of layoffs, falling to a seasonally adjusted 323,000 last week, its lowest level since mid-January 2008, the Labor Department reported.

Such data translates into higher expectations that the Federal Reserve will likely begin tightening monetary policy this year rather than next year, analysts said, boosting the greenback’s prospects.

“The strong US jobs data showed more proof that the US economy is on the rebound, a powerful fundamental theme that should, along with the weaker yen, keep the market bullish” in Tokyo, said Hiroichi Nishi, SMBC Nikko Securities general manager of equities.

Overnight on Wall Street, the Dow Jones Industrial Average slipped 0.15 per cent to 15,082.62 on Thursday as buyers took a breather after several successive record closes.