The Nikkei 225 stock average nose-dived over 800 points Thursday morning to slip below 12,500 for the first time in more than two months on the Tokyo Stock Exchange, as the yen rose to its strongest level against the dollar in two months.
The Nikkei stood at 12,415.85 at 11:04 a.m., down 873.47 points, or 6.57 percent, from Wednesday’s close, sinking to the lowest intraday level since the Bank of Japan decided to introduce a new aggressive monetary easing policy April 4.
The index ended the morning session down 701.92 points, or 5.28 percent, at 12,587.40.
“Investors are worried that the yen may strengthen even further,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management Co. “There isn’t any good material to boost the market right now, and investors who had bought too much are feeling uneasy and now dumping shares.”
The yen surged past ¥95 to the dollar after government data showed Japanese investors were net sellers of overseas bonds and stocks for a fourth straight week. After climbing to 94.45 at one point in Tokyo, the yen was up 1.3 percent to ¥94.75 per dollar as of 11:28 a.m. — its best performance since April 4.
The Japanese currency’s 4.2 percent, three-day advance is set to be the biggest since May 2010.
Meanwhile, the dollar was at its most volatile against the yen in more than two years ahead of the release of U.S. economic data that may provide more direction about when the Federal Reserve will begin to slow stimulus measures.
“The market wants evidence of Japanese capital outflow and that evidence is just not there — in fact, it’s the opposite,” said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group PLC.
“Global fund managers who got into short yen trades in the early part of the year (betting that its level would fall) are now sitting very nervously watching the volatility in global markets,” he said.