Tokyo Stock Prices Plummet
TOKYO (AP) _ Japanese stocks plummeted today and the dollar soared against the yen as investors registered their disappointment with the government’s long-awaited economic stimulus package.
The benchmark Nikkei Stock Average of 225 selected issues plunged 361.29 points, or 2.26 percent, closing at 15,649.95. The drop more than erased Friday’s gains of 249.55 points, or 1.58 percent, ahead of the stimulus package’s release.
The steps to revive Japan’s flagging economy included a one-time income tax cut but not the permanent tax relief that many economists say is necessary to entice Japanese consumers to spend again.
Analysts also faulted the $127 billion package, unveiled after stock markets closed Friday, because most of the money will end up as political pork in the form of public works projects.
While the infusion of cash may bring immediate benefits, building new dams and highways won’t address the deep-rooted problems Japan faces, such as gross inefficiency in many protected industries, analysts said.
``Although the economic package may have a short-term impact on the economy, it isn’t expected to have a long-term impact,″ said Ken Okamura, a strategist at Dresdner Kleinwort Benson (Asia) Ltd.
Trading was average, with about 328 million shares changing hands on the first section of the Tokyo Stock Exchange, down from Friday’s 384 million. Declines outnumbered gains 5-to-1.
The broader Tokyo Stock Price Index of all issues listed on the first section dropped 25.13 points, or 2.03 percent, to 1,213.82. It had gained 20.29 points, or 1.66 percent, on Friday.
In the currency market, growing pessimism about Friday’s stimulus package sent the dollar above 132 yen for the first time in four sessions.
In late afternoon, the U.S. currency bought 132.65 yen, up 2.87 yen from late Friday in Tokyo and well above its late New York rate of 131.16 yen on Friday.
Dismayed by grim prospects for an economic recovery at home, Japanese mutual fund managers helped bid up the dollar as they put more money into Wall Street’s high-flying markets, traders said.
The dollar also got a boost when a senior Japanese official failed to signal strong measures by the Bank of Japan to halt the yen’s decline.
Vice Finance Minister for International Affairs Eisuke Sakakibara, often called ``Mr. Yen″ because of his ability to sway currency markets, had been widely expected to call for intervention to prop up the Japanese currency at a news conference today in Tokyo.
``We wanted him to make stronger yen comments, and he didn’t,″ said Takashi Nakauchi, foreign exchange manager at Bank of Tokyo Mitsubishi Ltd.
The dollar traded as high as 132.85 yen and as low as 130.81 yen.
The benchmark No. 182 10-year Japanese government bond fell to 1.485 percent from Friday’s finish of 1.520 percent, driving its price up to 110.08 yen from 109.83 yen.