Tokyo stocks opened higher on December 12 led by exporters as the dollar jumped against the yen ahead of an expected US interest rate hike. / AFP PHOTO / Kazuhiro NOGI
TOKYO, Japan (AFP) — Tokyo stocks opened higher on Thursday as the dollar soared against the yen in response to the US central bank’s move to hike interest rates.
The greenback was trading at a 10-month high of 117.63 yen — a plus for shares of Japanese exporters — after the Federal Reserve deemed the US economy strong enough to absorb higher borrowing costs.
It was only the second rate rise in a decade.
The policy-setting Federal Open Market Committee voted unanimously to increase the key federal funds rate to a range of 0.5 to 0.75 percent, but said the world’s biggest economy likely will require only “gradual” rate increases going forward.
“Japanese stocks will be trying higher levels thanks to the yen’s fall into the 117 range (against the dollar),” Yoshihiro Ito, chief strategist at Okasan Online Securities, said in a commentary.
A weak yen boosts the profitability of Japanese firms doing business overseas and usually stokes demand for their shares.
Tokyo’s benchmark Nikkei 225, which closed at a fresh one-year high on Wednesday, added 0.58 percent, or 111.33 points, to 19,364.94 early trade.
The Topix index of all first-section issues was up 0.48 percent, or 7.32 points, to sit at 1,546.01.
Hitachi rose 1.69 percent to 646.5 yen after the Nikkei business daily reported that Tokyo may arrange an aid package, including loans and state investment, totalling one trillion yen ($8.5 billion) for a British nuclear power plant project led by Hitachi.
Toyota rose 1.96 percent to 7,169 yen while Sony firmed 0.11 percent to 3,376 yen.
Financial stocks were also higher with Mitsubishi UFJ Financial Group up 1.48 percent at 760.1 yen and Mizuho rising 0.49 percent to 221.2 yen.
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