Asian stock markets closed lower on Friday as an otherwise uneventful day turned volatile after a radical downturn in the US dollar, dealers said.
They said investors have largely got used to the idea the dollar will go lower but the sharp and very rapid slump in the US unit to record lows against the euro was too much to be ignored, leading to a prompt sell-off in afternoon trade.
The trigger for the dollar was a Chinese report that Beijing would cut its holding of US dollar assets in view of the sustained falls in the currency.
Some of the damage in the US dollar and stocks was repaired when further reports out of China modified the initial news but the episode will have driven home the point that much is riding on the outlook of the US currency.
Dealers said the reaction was also muted in some part by the fact that New York was closed overnight for the Thanksgiving holiday.
Despite the negative backdrop on the currency front, Sydney once again powered to a record close, with some now talking confidently that the 4,000 points level could be in sight for the wonder market of the region.
The TAIEX closed 1.35 percent lower, reversing early gains as profit-taking set in led by the financials and key tech stocks, Taiwan Semiconductor Manufacturing Co (TSMC,
They said the market continues to correct after its recent advance above 6,000 points, which is clearly a major resistance level.
The TAIEX closed down 76.59 points at 5,778.65, off a high of 5,935.20, on turnover of NT$87.1 billion (US$2.7 billion).
Decliners led gainers 556 to 110, with 110 stocks unchanged.
"There were expectations of resistance around 6,000 points," said Aaron Huang, vice president with Yuanta Core Pacific Securities Co (
"Riding on gains made in early trade, investors locked in profits late in the session given some caution ahead of the weekend," Huang said.
"Many anticipate consolidation for the local bourse and investors were unwilling to make any aggressive moves," he added.
TSMC closed down NT$0.70 to NT$47.60, UMC shed NT$0.40 to NT$20.00 and AU Optronics Corp fell NT$0.20 to NT$41.00.
Japanese share prices closed 0.61 percent lower in cautious trade on continued concerns that a stronger yen could hurt exports, the driver for the country's recovery, dealers said. The Tokyo Stock Exchange's benchmark NIKKEI-225 index lost 66.59 points to 10,833.75. The broader TOPIX index of all First Section shares fell 3.24 points or 0.30 percent to 1,091.21.
South Korean share prices closed 1.65 percent lower, reversing early gains with sentiment undercut as the won rose to 7-year highs against the dollar to spark increasing concerns over the country's export performance, dealers said.
The KOSPI index closed down 14.37 points at 858.12, off a low of 856.89.
Hong Kong share prices closed 0.23 percent lower, giving up early gains on profit-taking ahead of the weekend, dealers said. They said trade was cautious, with investors unsettled by the sharp sell-off in the dollar in the afternoon.
The key Hang Seng Index closed down 31.58 points at 13,895.03, off a low of 13,856.10 and high of 14,009.13.
The Hang Seng China Enterprises Index of locally traded China stocks was up 23.97 points or 0.49 percent at 4,934.39.
"There was resistance at the 14,000 level and most investors were cautious ahead of the weekend. Trading was confined within a narrow 150-point range and there was profit-taking as the market consolidated," said Howard Gorges, vice chairman at South China Securities.