Tokyo shares jumped 2.09 percent yesterday as the yen weakened after Japan avoided criticism at G20 talks over the recent slide in its currency.
The benchmark Nikkei 225 added 234.04 points to 11,407.87 by the close, while the TOPIX of all first-section shares rose 2.15 percent, or 20.28 points, to 962.69.
Bargain hunters moved in after the headline index dropped 1.18 percent on Friday as fears grew that the G20 meeting in Moscow would see Japan accused of manipulating the yen to boost Japanese exports, risking setting off a global currency war.
However, a communique from the meeting refrained from singling out Japan despite heavy criticism, particularly in Europe, over the new government’s loose monetary policy. The Tokyo market received a boost from the statement, which took some heat off Japan and its economic policies.
Chris Tedder, research analyst at Forex.com in Sydney, said not naming Tokyo “tells Japan that its path of aggressive policy loosening is acceptable as long as it isn’t directly aimed at the yen.”
Yoshihiro Okumura, general manager of research at Chibagin Asset Management, told Dow Jones Newswires: “Japan was not mentioned by others. The results were largely positive for Japan.”
In forex trading, the yen weakened to ￥93.95 against the US dollar from ￥93.53 in New York on Friday. It also lost ground against the euro, which bought ￥125.32 from ￥124.97 in US trade.
The South Korean won dropped for the first time in a week as the yen decline following the G20 meeting sparked concern South Korea will step in to weaken its currency to support exports.
The won fell 0.4 percent to close at 1,082.10 per US dollar in Seoul. It gained 1.6 percent last week, the biggest five-day advance since the period ended Dec. 2, 2011.
Meanwhile, Japanese Prime Minister Shinzo Abe yesterday ramped up pressure on the central bank, signaling he may rein in the institution’s independence if it fails to achieve an ambitious inflation target.
The 58-year-old Abe — who swept to power in a landslide election win in December — warned that failure by the Bank of Japan (BOJ) to meet the 2 percent target could open the door to “revising the BOJ law.”
The bank, under pressure from Japan’s conservative government, last month unveiled a plan for unlimited easing and the inflation target — which is aimed at dragging the country out of its long-running deflation.
Abe said the bank’s decision to tow the line last month saved it from any legislative changes, but warned that he still expected results.
“If it cannot responsibly deliver results, we would have to consider revising the BOJ law,” Abe told parliament.
He added that governments and central banks in Europe and elsewhere have previously agreed on inflation targeting.
Bank of Japan Governor Masaaki Shirakawa, who butted heads with Abe on policy matters, is to step down next month, several weeks before the official end of his term.