Shares of Toyota, Honda, Nissan and other exporters rose due to a 2.3% increase in the Nikkei stock average to a one-month closing high as Japan moved to weaken the yen. For the first time in six years, Japan decided to intervene and sell yen to bring the currency off 15-year highs against the dollar. This action brought the Nikkei out of its negative state and the index went up to 3% at one stage.
As a result, automakers posted increases across the board, with Toyota Motor Corp. growing 3.8% to 3,010 yen and Honda Motor Co. rising by 4% to 2,944 yen.
Meanwhile, Nissan Motor Co. gained 3.7% to 702 yen. Tomomi Yamashita, a fund manager at Shinkin Asset Management, said that the Japanese economy relies heavily on its earnings from exports overseas. He said that the intervention is timely and has already had an impact after a series of verbal threats.
He explained that corporate performance “hasn't been bad” but the shares have become “unattractive” with the dollar nearing 80 yen. He believes that the next question now is if the government can help the economy further by following through with steps.
After dropping as low as 9,199.08, the benchmark Nikkei gained 217.25 points to 9,516.56. The dollar had traded at around 85.00 yen after reaching a 15-year low of 82.87 yen.
This rise in the yen had occurred after Prime Minister Naoto Kan got a Japan ruling party vote victory last Tuesday over rival Ichiro Ozawa who had been urging for interventions to weaken the yen.
Market players said that the intervention in the foreign exchange market had made short-term speculators hurry to cover short positions in stock futures. [via autonews - sub. required]