Tokyo, 14 July, /AJMEDIA/
The yen fell to the 138 line versus the U.S. dollar Thursday morning as a stronger-than-expected U.S. consumer price index raised prospects of aggressive rate hikes by the Federal Reserve, while the weakening yen sent Japanese stocks higher.
The 225-issue Nikkei Stock Average rose 185.43 points, or 0.70 percent, from Wednesday to 26,664.20. The broader Topix index was up 3.07 points, or 0.16 percent, at 1,891.92.
On the top-tier Prime Market, gainers were led by farm and fishery, marine transportation, and electric appliance issues.
At noon, the dollar fetched 138.02-03 yen compared with 137.38-48 yen in New York and 137.04-05 yen in Tokyo at 5 p.m. Wednesday.
The euro was quoted at $1.0020-0024 and 138.30-36 yen against $1.0053-0063 and 138.18-28 yen in New York and $1.0032-0034 and 137.48-52 yen in Tokyo late Wednesday afternoon.
The yen fell to its lowest level against the dollar since September 1998 after overnight data showed U.S. inflation surged to 9.1 percent in June from a year earlier, rising at the fastest pace in more than 40 years and exceeding the market consensus of 8.8 percent.
Dollar buying by domestic importers for settlement purposes also pushed the yen down, dealers said.
“The strong CPI fanned fears the Fed may push for a large interest rate hike of as high as 1 percent” in the upcoming policy meeting late this month to curb inflation, said Yukio Ishizuki, a senior foreign exchange strategist at Daiwa Securities Co.
The Fed’s move would result in a further widening of the interest rate gap between the United States and Japan as the Bank of Japan remains committed to powerful monetary easing and to conducting bond-buying operations to keep interest rates near zero.
The weakening yen helped lift Japanese stocks which opened lower after falls on Wall Street but later trimmed losses to end the morning higher with buying in some exporters as well as Nikkei heavyweights.
But the rise in the stock market was limited, as investors refrained from making bold moves ahead of the release Friday of consumer confidence data from the University of Michigan, said Kazuo Kamitani, a strategist in the Investment Content Department of Nomura Securities Co.
Tokyo Electron surged 1,290 yen, or 3.1 percent to 43,570 yen, Fast Retailing, operator of the Uniqlo clothing chain, gained 1,210 yen, or 1.8 percent, to 70,310 yen, and SoftBank Group rose 78 yen, or 1.5 percent, to 5,416 yen.
Among exporters, Panasonic Holdings rose 9 yen, or 0.8 percent, to 1,120.0 yen, while Toyota inched up 4 yen, or 0.2 percent, to 2,138.5 yen.
Among Prime Market issues, advancing issues outnumbered decliners 868 to 848, while 119 ended the morning unchanged.
