Nikkei falls as overnight yen strength weighs

The Nikkei share average fell for a fourth day on Friday after the dollar plunged to a near 17-month low against the yen overnight, pressuring exporters and dented overall sentiment. The Nikkei fell 1.3 percent to 16,724.81, the lowest closing level since March 9. The Nikkei dropped 1.3 percent for the week. The broader Topix fell 1.0 percent to 1,345.05 and the JPX-Nikkei Index 400 declined 1.1 percent to 12,144.78.
During midday, the Nikkei share average fell 1.3 percent to 16,718.08 during midmorning trade. Japan's benchmark index is on course to end the week about 1.3 percent lower. The Nikkei has shed more than 12 percent so far this year. "The FOMC pushed out rate hikes because of concerns about the rest of the world, and the rest of the world took that as bad news being good news," said Nicholas Smith, a strategist at CLSA.
"In Japan, bad news is just bad news, and markets are reacting to fears of slowing global growth and a stronger yen." The dollar tumbled to 110.67 against the yen overnight, its lowest since October 2014 as buyers of the greenback reversed positions a day after the US Federal Reserve announced a more dovish than expected outlook on rate increases for 2016.
The yen's overnight volatility was exacerbated by reports that the Bank of Japan was asking market participants about the cause of the yen's moves against the dollar during US trading hours. A person familiar with the matter told Reuters the BOJ's inquiries were "not a rate check," but simply an attempt to figure out why the currency was moving. A rate check by the central bank is often seen as a threat or precursor to intervention.
"The dollar/yen cross into 110 territory is significant because that's a psychological level, but the fact is Japanese exporters will be profitable even if the yen strengthens well beyond where it is now," said Gavin Parry, managing director at Parry International Trading. The stronger yen squeezed Japan's automakers, which rely heavily on exports for profits. Toyota Motor Corp slipped 2.5 percent to a 2-1/2 week low while Nissan Motor Co Ltd declined 2.6 percent. Shares of tyre maker Bridgestone Corp fell as much as 3 percent. Lifenet Insurance Co bucked the morning's weakness, soaring 14.5 percent after Nomura Securities raised its rating to "buy" from "neutral."