Japan’s Nikkei slides on stronger yen amid intervention threat

TOKYO: Japan’s Nikkei share average fell on Monday as a stronger yen broadly weighed on the market, while currency intervention worries deterred equity buyers.

The yen traded as strong as 154.22 per dollar, a more than three-month peak, after what looked like a precursor to intervention sent Japan’s currency spiking on Friday and catalysed further advances over the rest of the day.

A source told Reuters that the New York Federal Reserve conducted so-called “rate checks” on the dollar-yen pair that day, potentially signalling both that intervention was close and that it could be a joint action between US and Japanese authorities.

A stronger yen cuts the value of offshore revenue for Japan’s many heavyweight exporters.

The Nikkei sank 1.6% to 53,008.67 in early trading, with 196 of its 225 components under water, while 28 rose and one traded flat.

The broader Topix dropped 1.8% to 3,565.76. An index of automotive shares tumbled 2.8%, the most among the Tokyo Stock Exchange’s 33 industry groups. Rubber, which includes tyre manufacturers, sank 2.5%.

Toyota Motor slid 3.1% and Honda slumped 3.7%.

“The risk of intervention remains, and the outlook is unclear,” said Maki Sawada, a strategist at Nomura Securities. “For both currencies and stocks, it’s hard for traders to take positions in this environment.”

The biggest weight on the Nikkei was artificial intelligence (AI)-focused startup investor SoftBank Group, which sank 4.2%, shaving 142 points from the index.

At the same time, Furukawa Electric and Fujikura , which have benefited from bets on AI data centre investment, rose 6.4% and 2.2%, respectively.