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Wednesday, August 17, 2022

Tokyo stocks close down 1.58pc after second China yuan cut

Tokyo stocks close down 1.58pc after second China yuan cutTOKYO: Tokyo stocks fell 1.58 percent Wednesday after China cut the value of its currency for the second day in a row, aggravating worries about the strength of the world’s number two economy.

The Nikkei 225 index at the Tokyo Stock Exchange was down 327.98 points to 20,392.77, while the Topix index of all first-section shares slipped 1.29 percent, or 21.85 points, to 1,665.75.

Tokyo’s losses accelerated, in line with sharp falls in other Asian shares and following losses in the US and Europe, after China’s central bank trimmed the yuan’s reference rate by 1.62 percent Wednesday.

The daily rate that sets the value of the Chinese currency against the greenback was lowered to 6.3306 yuan, from 6.2298 the previous day, the People’s Bank of China (PBoC) said in a statement on its website.

The move, a day after the unit was devalued by nearly two percent, added to jitters in global equity, forex and commodity markets and raised concerns about the health of Asia’s top economy.

The cuts have been widely seen as way to help boost exports as growth slows in China, but have also sparked fears of a war where countries compete to reduce the value of their currencies.

“Worries about China’s economic slowdown are once again taking centre stage,” Hiroichi Nishi, a manager at SMBC Nikko Securities, told Bloomberg News.

“China probably devalued the yuan because it wants to see a recovery in exports. Exporting firms in Japan that have a large share of sales in China, such as machinery and iron and steel stocks, will see the most impact.”

China’s policy shift follows data this month that showed a plunge in overseas shipments, weaker-than-estimated manufacturing and slowing credit growth.

In Tokyo share trading, automaker Toyota fell 1.66 percent to 7,987 yen, while Nissan, also dependent on China for sales, dropped 2.09 percent to 1,168.5 yen.

Construction equipment giant Komatsu tumbled 2.90 percent to 2,275 yen while Koito Manufacturing, which relies on China for about a quarter of its headlight sales, dropped 3.60 percent to 4,685 yen.

Denso Corp. fell 1.33 percent to 5,967 yen as the leading Nikkei business daily reported that Toyota will no longer buy the company’s navigation systems.

Energy shares slumped as oil traded near a six-year low, with Inpex down 3.19 percent to 1,287.5 yen.

In Tokyo forex trade, the dollar fetched 125.00 yen Wednesday afternoon, down from 125.12 yen in New York late Tuesday.

On Wall Street, the Dow fell 1.21 percent, the broad-based S&P 500 was down 0.96 percent while the Nasdaq dropped 1.27 percent.

Copyright AFP (Agence France-Presse), 2015

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