Tokyo, 1 September, /AJMEDIA/
The Japanese yen fell Thursday to a fresh 24-year low in the 139 zone against the U.S. dollar in Tokyo after a Federal Reserve official’s hawkish remarks fueled speculation the interest rate gap between the United States and Japan will widen.
The Japanese currency briefly weakened to the upper 139 level against the dollar, its lowest level since September 1998, after hitting 139.38 on July 14.
Investors unloaded the yen and sought the dollar after Cleveland Fed President Loretta Mester said overnight the U.S. central bank should raise its benchmark rate to above 4 percent by early next year from the current 2.25-2.5 percent.
Market participants had expected the Fed will not increase fund rates above 3.9 percent and start reducing rates from the latter half of the next year, said Takuya Kanda, senior researcher at the Gaitame.com Research Institute.
But Mester’s comments reminded investors of the diverging paths for Japanese and U.S. monetary policies, or the widening of their interest rate differentials, as the Bank of Japan maintains its ultraloose monetary policy.
At noon, the dollar fetched 139.48-51 yen compared with 138.91-139.01 yen in New York and 138.58-61 yen in Tokyo at 5 p.m. Wednesday.
The euro was quoted at $1.0021-0025 and 139.77-86 yen against $1.0048-0058 and 139.64-74 yen in New York and $1.0002-0003 and 138.62-66 yen in Tokyo late Wednesday afternoon.
Tokyo stocks were sold in the morning as investor sentiment was dented after U.S. shares fell for the fourth straight session on concerns over the impact of U.S. monetary tightening on the world’s largest economy.
The 225-issue Nikkei Stock Average fell 418.39 points, or 1.49 percent, from Wednesday to 27,673.14. The broader Topix index was down 23.91 points, or 1.22 percent, at 1,939.25.
All industry categories fell except for construction, and iron and steel issues. Decliners were led by mining, electric appliance, and transportation equipment.
Concerns over energy supply in Europe were rekindled after Russia’s Gazprom said it has stopped energy supplies to the region for maintenance, weighing on stocks globally, brokers said.
Among Prime Market issues, declining issues outnumbered advancers 1,573 to 216, while 47 ended the morning unchanged.
Technology shares tracked overnight falls in their U.S. counterparts. Semiconductor equipment maker Tokyo Electron lost 1,200 yen, or 2.7 percent, to 42,960 yen, while chipmaker Screen Holdings sagged 300 yen, or 3.2 percent, to 9,080 yen.
