yen surges, tokyo stocks stumble: export giants feel the pinch

2025-02-21 general

Tokyo, Friday, 21 February 2025.
tokyo’s stock exchange faced headwinds as the yen strengthened to levels unseen in two and a half months. this appreciation, driven by us economic slowdown fears and narrowing interest rate gaps, hit export-heavy stocks particularly hard. the nikkei index took a significant hit, plummeting by 1.24%, with car manufacturers and electronics firms bearing the brunt. the yen’s rise to below 150 yen per dollar intensifies concerns over export profitability, casting a shadow over tokyo’s market.

market overview

The yen’s appreciation to ¥149 against the dollar in early Tokyo trading marks a notable shift [1][2]. This level, last seen in early December 2024, reflects growing concerns over a slowing U.S. economy and its impact on international monetary policy [1][2]. The rise in the yen has triggered a sell-off in export-oriented stocks, as investors anticipate reduced earnings from overseas sales [3][7]. The Nikkei index closed at 38678.04, a decrease of 486.57 points [3].

cpi impact

Japan’s January consumer price index (CPI) showed a 3.2% increase, excluding fresh food, surpassing market expectations [1][2]. This figure adds complexity to the Bank of Japan’s (BOJ) policy outlook [2]. While the CPI data initially spurred yen buying on speculation of further BOJ rate hikes, profit-taking soon reversed this trend [2]. The market’s reaction suggests that the CPI surprise was already factored into expectations, limiting its lasting impact on the yen’s trajectory [2].

sector performance

The strong yen particularly hurts sectors reliant on overseas sales [3][7]. Shares of major exporters such as Honda, Mitsubishi, Nissan, and Toyota experienced declines ranging from 1.73% to 2.26% [7]. Consumer electronics firms like Panasonic and Sharp also faced selling pressure, with respective drops of 2.58% and 0.68% [7]. These movements reflect investor apprehension about the impact of a stronger yen on the competitiveness and profitability of japanese goods in international markets [3][7].

geopolitical factors

Broader market sentiment was also affected by geopolitical factors [3]. U.S. President Trump’s criticism of Ukraine’s President Zelenskyy added to investor unease, potentially complicating peace negotiations [3]. Separately, concerns persist regarding potential U.S. tariff policies, particularly on imported automobiles, further contributing to market volatility [6]. These external factors amplify the challenges facing the tokyo stock exchange, increasing uncertainty for investors [6][3].

analyst views

Market analysts suggest that the afternoon’s yen appreciation intensified the stock market’s decline [6]. Support from gains in other asian markets provided some counterbalance, preventing a steeper fall [6]. However, worries about U.S. tariff policies are expected to persist, indicating continued market caution [6]. Investors should closely monitor currency movements and global trade developments to assess potential risks and opportunities in the tokyo stock exchange [GPT].

Bronnen

yen appreciation tokyo stock