Investors in Tokyo reacted to comments made by US Federal Reserve Chair Jerome Powell, indicating a possible rate cut at the central bank’s next policy meeting. This led to a sell-off of the dollar in favor of the yen and a decrease in stock prices of Japanese exporters. The yen strengthened to the 143-yen level, prompting investors to sell shares of big Japanese exporters, including automakers. The Nikkei 225 finished down 0.6 percent at 38,110.
Powell’s speech at the Jackson Hole symposium raised expectations that the interest rate gap between Japan and the US will narrow, leading to a decline in the dollar compared to the yen. The market trend continued on Monday as well.
Bank of Japan Governor Ueda Kazuo also indicated on Friday that the BOJ will not hesitate to raise interest rates if the economy and inflation conditions permit. Analysts note that concerns over the situation in the Middle East, particularly after missile strikes between Lebanon’s Hezbollah and Israel, are also impacting the yen’s value.
These developments have created uncertainty in the Japanese markets, with investors closely monitoring the upcoming Fed policy meeting in September. The yen’s continued appreciation and the possibility of interest rate adjustments by central banks are key factors influencing investor sentiment in the region.
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