Japan's outspoken new finance minister drove the yen lower Friday, boosting Japanese exporters as Asian stocks in general benefited from Wall Street's best finish since October 2008. A day after rattling markets with a call for a weaker currency, Naoto Kan cooled his rhetoric Friday saying that markets should determine foreign exchange rates, but added Tokyo would intervene over a strong yen if needed.
"Basically, the market determines foreign exchange" rates, Kan said at a news conference. As finance minister, however, it was his duty "to take action on foreign exchange when necessary," he added. The dollar rose to 93.35 yen in Tokyo afternoon trade, up from 93.25 in New York late on Thursday, when the Japanese currency had fallen sharply in response to Kan's remarks.
The euro was little changed at 1.4310 dollars after 1.4318 and at 133.58 against 133.50. Stock markets in Tokyo and Sydney hit highs not seen for more than a year. In Tokyo the Nikkei closed up 1.09 percent, or 116.66 points, to 10,798.32, the best finish since October 2008. Sydney closed up 0.26 percent, or 12.7 points, with the S&P/ASX200 at 4,912.1 after peaking at its highest level for 15 months intraday. Chinese shares rebounded late to close up 3.22 points, or 0.10 percent, at 3,196.00 in choppy trade which saw a sell-off in metal companies on lower commodity prices, as Beijing reportedly warned state-run companies about investment risk.
Sentiment was also hit by the central bank's surprise hike of the auction yield on three-month bills, shifting the balance of fears from monetary policy being too loose to it being too tight, ING's Tim Condon said. Hong Kong closed up 27.3 points, or 0.12 percent, at 22,296.75 on bargain hunting following earlier falls. Wall Street had earlier prompted a strong start in the region after the Dow Jones Industrial Average closed up 0.31 percent to its highest level since October 2008 on better-than-expected sales results from retailers. However, gains were capped by caution ahead of Friday's key unemployment data, seen as a barometer of any US recovery. Kan's remarks Thursday, in which he said he wanted to see a weaker yen, prompted a thinly veiled rebuke from Japan's Prime Minister Yukio Hatoyama who warned him not to comment publicly on currency levels. It nevertheless signalled that Tokyo was toughening its stance against the unit's strength, which is bad for exporters.
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