TOKYO: Tokyo shares rallied 0.51 percent Monday morning as Japanese authorities stepped into the markets to weaken the yen, after the currency hit a new post-war high against the dollar.
The benchmark Nikkei index at the Tokyo Stock Exchange, which ended last week at an eight-week high as fears over the European debt crisis eased, opened down 0.43 percent.
But the index moved into positive territory as the dollar shot above 78 yen compared to a fresh postwar low of 75.32 yen hit early in the morning, and continued creeping up to top 79 yen in midday trade.
The Nikkei was up 45.80 points at 9,096.27 by the lunch break and the broader Topix index of all first-sections issues rose 3.65 points or 0.47 percent at 775.08.
Japan's government confirmed it had intervened in currency markets for the first time since August to weaken the yen.
Finance Minister Jun Azumi told reporters that Japan's move was unilateral but did not comment on the size of the intervention.
The August intervention briefly sent the dollar above 80 yen from below 77 yen before authorities stepped in.
"The question, as in the past, is sustainability," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
"Previous interventions have had an impact for two or three days, but it has not led to a trend shift," he told Dow Jones Newswires.
Intervention "may also have been necessary to prevent the earnings momentum for Japanese companies from slipping further (due to the strong yen) and the Thai floods," he said.
Concerns have grown in Japan that the strong currency, which erodes the repatriated profits of exporters and makes exports less competitive, could undermine a fragile recovery from the March 11 earthquake and tsunami.
Shares of major Japanese exporters gained immediately on the yen's fall, with Canon rising 1.26 percent to 3,610 yen in the morning session and Toyota up 2.16 percent to 2,689.
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