Tokyo shares fall sharply as yen concerns persist

Tokyo stocks sank on Wednesday as investors shunned risk on worries about high US inflation, while the yen’s continued depreciation prompted Japanese officials to voice concern.

The benchmark Nikkei 225 index closed down 2.78 per cent, or 796.01 points, to 28,818.62, while the broader Topix index ended 1.97 per cent lower, or 39.11 points, at 1,947.46.

The dollar fetched 143.74 yen, against 144.43 yen in New York Tuesday, after reports the Bank of Japan conducted an operation often seen as a precursor to currency intervention.

The Tokyo market tracked falls on Wall Street, where fears over the Federal Reserve’s monetary tightening (were) rekindled in the wake of the release of higher-than-expected US inflation data, Okasan Online Securities said in a note.

On Tuesday, US government data showed that the annual increase in the consumer price index had slowed slightly in August to 8.3 per cent, but that prices continued to rise month-on-month, increasing by 0.1 per cent.

The Nikkei dropped sharply as the risk-averse mood spread, Okasan said.

Investor sentiment worsened rapidly in Tokyo, with many motivated to square positions in order to minimise management risks, the brokerage added.

Local media said Wednesday that Japan’s central bank had carried out a rate check in response to the yen’s continued free fall against a strengthening dollar.

A Bank spokesman contacted by AFP declined to comment on the reports, which prompted the yen to strengthen quickly. The dollar touched a low of 143.53 yen within an hour from the reports emerging.

Among major shares in Tokyo, SoftBank Group tumbled 4.4 per cent to 5,405 yen, Sony Group plunged 3.6 per cent to 10,375 yen and Toyota lost 1.4 per cent to 2,038 yen.