Asian stocks were higher in quiet post-Christmas trade Wednesday, with Tokyo shares lifted by a weaker yen which sank to a new 20-month low against the greenback.
The Nikkei 225 index at the Tokyo Stock Exchange was up 0.40 percent in the morning as the Japanese currency dipped past 85.00 yen against the dollar for the first time since April 2011.
A strong yen is negative for Japanese markets as it erodes exporters’ revenue and makes their products less competitive overseas.
Shanghai was flat, while Seoul opened 0.78 percent higher.
Markets in Hong Kong, Sydney and Wellington were closed for a public holiday.
Regional gains came despite a lack of fresh trading cues as US and European markets were shut for Christmas, with pessimism still lingering about prospects for a “fiscal cliff” deal by the end of the year.
US lawmakers are set to return to the negotiating table after Christmas holidays in a last ditch effort to reach a deal to avert the so-called cliff, a series of steep tax hikes and spending cuts due to take effect in January.
Experts warn that going over the cliff could plunge the world’s biggest economy back into recession.
But despite those concerns, the dollar improved on Wednesday against the yen, hitting a 20-month high on expectations that the Bank of Japan would initiate more monetary easing steps.
The Japanese currency has been declining as incoming prime minister Shinzo Abe, whose Liberal Democratic Party won a landslide national election last week, steps up pressure on the central bank to take bold easing steps.
Abe is to be named prime minister later Wednesday, after he swept to power on a hawkish platform of getting tough on diplomacy while fixing the economy with active fiscal spending and monetary easing.
“The yen is firmly on a weakening path and there is no meaningful rebound in sight at the moment,” Daisuke Uno, strategist at Sumitomo Mitsui Banking, told Dow Jones Newswires.
However the policy easing is “almost completely factored in now as the new government takes the reins. By (end March 2013) the 86-87 mark is likely but the fall will be at a decelerated pace than what we’ve seen to this point”, he said.
In Asian trade the greenback was at 85.12 yen from 84.78 yen in Tokyo afternoon trade on Tuesday, while the euro bought 112.250 yen, compared with 111.75 yen.
Oil prices were higher, with New York’s main contract, light sweet crude for delivery in February rising 49 cents to $89.10 a barrel and Brent North Sea crude for February gaining 40 cents to $109.20.
Gold was at $1,655.04 at 0220 GMT compared with $1,655.80 late Monday.
Source: AFP
