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Tokyo shares plunged Thursday as the strong yen dragged down the earnings prospects of major exporters in the manufacturing and high-tech sectors.

The benchmark Nikkei 225 index closed 240.38 points lower at 11,515.02, briefly flirting with the postbubble low of 11,477.56.

The tumble washed out gains made earlier this week when the Bank of Japan pumped more money into the banking system to try to boost the economy.

Rekindled fears about the U.S. economy’s future pushed the dollar down to a two-month low against the yen, triggering the fall in stocks. Despite rumors of intervention to curb its rise, the yen peaked at 119.28 in Tokyo against the dollar during the day, trading at 119.33 as of 5 p.m.

A stronger yen is a heavy blow to the nation’s exporters as it cuts into their overseas earnings when they are changed back into the Japanese currency.

Share prices for Nintendo, which analysts say secures about 70 percent of its sales abroad, plunged 9.26 percent to 19,500 yen by the close.

Honda Motor Co., the nation’s third largest automaker, saw its stock tumble 4.75 percent to 4,810 yen, while leading carmaker Toyota Motor Corp. fell 2.5 percent to 3,900 yen.

BOJ Gov. Masaru Hayami denied that the central bank would intervene, saying that it would be “difficult” and “unnecessary.”

“The entire globe is in a slowdown and is trying to raise exports,” Hayami told reporters at a regular news conference. “Sales and purchases of foreign currencies have ramifications worldwide, and it is not for a single nation to make such decisions on its own.

“I hold to my view that it is desirable for the currency markets to reflect the fundamentals (of economic strength) and move in a steady manner.”

But the prospect of a strong yen and further plunges on the stock market are bound to redouble pressure on the central bank for further easing next month.

The BOJ raised the amount of surplus money in the banking system earlier this week in an attempt to further push down interest rates. In textbook economics, this should lead to a boost in the amount of money circulating in the economy.

As the bank had earlier insisted that further easing would not stimulate the economy without structural reform, its latest move was widely seen as bowing to political pressure.

“By easing money, the BOJ tightened the noose around its neck,” said Yasunari Ueno, chief market economist of Mizuho Securities Co.

The clamor for further easing will only grow louder, while the BOJ’s next move is less likely to surprise market players, he said.

The central bank’s most vocal critics within the Liberal Democratic Party have been calling for Hayami’s head, charging that the BOJ has done little to fight deflation or falling prices.

Hayami, who plans to see out the rest of his five-year term, says the bank has taken “quick and bold action” over the past three years, aggressively pushing interest rates down to near-zero levels.

“We have not been standing around wringing our hands,” Hayami said. “We are the world’s boldest central bank.”

Share prices fell despite an upward revision for gross domestic product for the January-March quarter. The economy was initially said to have contracted by 0.2 percent, but after the revision the economy was seen growing by 0.1 percent.

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