Nikkei opened at 14801.64 and reached to 14816.65 at one point; however, it then retreated to 14742.42-23.76 (-0.16%) at 3:28pm JST amidst the news that the Federal Reserve will not alter its USD85 billion-per-month bond-buying program also called ‘Quantitative Easing.’
Nikkei’s fall is attributed to JPY’s lower trade against USD. Similarly, MSCI’s broadest index of Asia-Pacific shares outside Japan slid by 0.2% in today’s trading. It was unexpected as it was faring well this week at around 3.1%.
Japanese Yen under Pressure
Japanese Yen has come under some pressure, as yesterday the Bank of Japan Board Member Takahide Kiuchi indicated that the central bank may expand its easing program. Market observers believe that Japan’s current stimulus has partially been able to achieve the goal of weakening the yen and expanding the stocks’ value; however, the goal of 2% inflation within two years still seems difficult.
In today’s trade, the JPY weakened further by 0.15% and trading at 99.320, and according to traders there is no hope for the Japanese currency as the dollar will strengthen against it in the long run on the U.S. economic recovery. However, Japan should not regret this as it is what they aim for, as it will increase exports and the value of Japanese stocks.
Indian Stocks Fall
Indian stocks fell amidst the news that the central bank has unexpectedly raised its key interest rate. Decision from the Reserve Bank of India has dashed the hopes from the investors who were happy about the U.S. Fed’s decision to maintain a status quo on QE tapering. In consequence to the RBI decision, the S&P BSE Sensex plunged over 550 points today.
Similarly, the 50-share Nifty index fell over 100 points to trade below the 6,000 levels and Indian (SENSEX) stocks are swinging between gains and losses following the benchmark index’s surge which reached a three-year high yesterday. As the measures are unwound, the objective is to normalize the conduct and operations of monetary policy.
According to market observers, the measure from the RBI was expected as its new chief is an ardent fan of the Chicago School of economics. The Reserve Bank of India Governor Raghuram Rajan decided to raise the key repo rate by a quarter point and aims to fight inflation living which are aimed to curb inflation, which is high and household financial saving is lower than desirable.
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