Stocks fall as yen hits 20-year low

TOKYO Kyodo Tokyo stocks fell sharply Monday morning as the yen's decline to a 20 year low against the U.S. dollar and advancing crude oil futures raised concerns about the Japanese economy.

The 225-issue Nikkei Stock Average fell 496.53 points, or 1.83 percent, from Friday to 26,596. The broader Topix index was down 30.20 points, or 1.59 percent, at 1,866. The decliners were led by service, food and machinery issues on the top-tier Prime Market.

After the dollar rose to the upper 126 yen range, its highest level since May 2002, it fell briefly to the lower 126 yen level after remarks by Bank of Japan Governor Haruhiko Kuroda on Monday, which said the yen's recent depreciation against the dollar had been quite rapid. The dollar was trading in the mid 126 yen range around noon and the yen-buying was short-lived. The dollar was bought on expectations that an increase in U.S. Treasury yields would widen the interest rate gap between the United States and Japan, according to dealers.

The euro was quoted at $1.0800-0804 and 136.70-80 yen against $1.0805 -- 0815 and 136.55-65 yen in New York and $1.080808 0813 and 136.71-75 yen in Tokyo late Friday afternoon.

Stocks fell over 500 points, or nearly 2 percent, after the Nikkei index extended losses in the morning.

Masahiro Yamaguchi, head of investment research at SMBC Trust Bank, said that weak U.S. stock futures pressured shares, although a weaker yen is usually a boon for export-oriented issues.

While a weaker yen boosts exporters' profits overseas when repatriated, it could slow economic growth with higher imported energy and food prices, weighing on consumer spending.

On the Tokyo Commodity Exchange, Middle East crude oil futures briefly hit 81,450 yen $640 per kiloliter, the highest level since August 2008, leading to further worries for import-reliant Japan.

The ongoing crisis in Ukraine weighed on the market, with no signs of the conflict ending as Russia intensified its attacks, Yamaguchi said.

Among prime market issues, declining issues outnumbered advancers 1,650 to 151, while 37 ended the morning unchanged.

Japan Airlines sank 57 yen, or 2.6 percent, to 2,169 yen, after saying Friday it expects to see a bigger net loss for the business year ending March due to the reduction of domestic travel demand in some prefectures earlier in the year.

The Kintetsu Group Holdings climbed 70 yen, or 1.9 percent, to 3,695 yen, after its parent Kintetsu Railway Co. announced on April 1, 2023 that it will raise its fares from April 1, 2023, raising expectations for increased revenue.

After the advance in crude oil futures, mining issues were higher, with Inpex adding 22 yen, or 1.4 percent, to 1,600 yen.