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Yen up, stocks down, fear high

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Yen up, stocks down, fear high


Fear continues to drive trading in Japan’s financial markets. An unfolding nuclear threat has investors dumping shares and trying to guess what the full financial and economic impact of the disaster would be.

The yen hit a record high against the dollar on Thursday in the belief that Japanese firms would have to repatriate billions from overseas to pay for reconstruction.

As the benchmark Nikkei went into free fall after the earthquake and tsunami, the value of the Japanese currency against the US dollar spiked.

Japan’s Economics Minister says he “doesn’t think the stock and currency markets are in a state of turmoil.”

Kaoru Yosano blamed the yen’s rise on buying by speculators.

He said that Japan’s Financial Services Agency and the country’s central bank have confirmed that insurance companies are not buying Japanese yen by selling overseas assets in order to raise money to pay for reconstruction from the quake and tsunami.

He added “They have ample cash, deposits and other liquid assets.”

Yosano spoke out against the speculators and called them “utterly thoughtless.”

The higher yen hits the profits of companies like Toyota – the world’s top carmaker – making it more difficult for Japan’s export dependent economy to recover.

Though for the moment Toyota and other major exporters are producing nothing. The carmaker has said its 12 main plants will stay shut until at least 22 March.

Nissan, Mazda, Honda, Hitachi, NEC, Fujitsu and Sony have also closed multiple factories.

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