Follow us on:   

Strong yen pulls Asian stocks down
May 2, 2016, 11:51 am

The yen appears unstoppable in the interim as it rises against the dollar while the Nikkei takes a beating [Xinhua]

The yen appears unstoppable in the interim as it rises against the dollar while the Nikkei takes a beating [Xinhua]


The Japanese yen has for the past few weeks defied the Bank of Japan’s (BOJ) efforts to weaken it against the dollar. Appearing unstoppable in the interim, it opened strong on Monday coming in at 107 before stabilizing at 106.60.

At it’s peak, the yen had risen to its highest gain against the greenback since 2008.

A strong yen is bad news for Japan’s economy because it means its products are more expensive for overseas importers.

The strengthening yen on Monday comes on the heels of last Thursday’s three per cent rise against the dollar following the BOJ’s surprise decision not to expand its stimulus program to revitalize the local economy.

The announcement left most Asian and emerging markets reeling and shaved tens of billions of dollars of stock worth off the Nikkei exchange.

That downward trend continued on Monday as the Nikkei again suffered a 3 per cent loss to 16,147.38.

South Korea’s Kospi fell 0.8 per cent to 1,978.15 at closing.

China’s benchmark Shanghai Composite Index dropped only 0.25 per cent to 2,938, buoyed slightly by somewhat reassuring news that business activity in China’s non-manufacturing sector expanded in April although at slower pace.

According to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing, the purchasing managers’ index (PMI) for the non-manufacturing sector stood at 53.5 in April, down from 53.8 in March but well above the 50 mark that separates expansion and contraction.

But Hong Kong’s Hang Seng Index fell by 1.50 per cent to 21,067 on Monday.

India’s benchmark SENSEX also fell 0.66 per cent to 25,436.

The Asian drag tugged at European stocks. London’s FTSE was down 1.27 per cent in afternoon trading, while the CAC 40 in Paris was up 0.58 per cent 4,454 after Friday’s slump of 2.8 per cent.

The CAC 40’s increase was minimized because of a report which indicated that France’s manufacturing activity stalled to its slowest pace in a year.

But Eurozone manufacturing activity was slightly up as a whole; the PMI rose to 51.7, beating forecasts.

In Germany, the DAX was up 1.08 per cent on strong manufacturing data.

The BRICS Post with inputs from Agencies