Yen Falls and Stocks Soar as Bank of Japan Intervenes in Currency Market

In Asia Wednesday Japan's Nikkei 225 Index advanced 2.3% to 9,517 and Hong Kong's Hang Seng inched up 0.1% to 21,726. In China the Shanghai Composite sank 1.3% to 2,653.

For the first time in six years the Bank of Japan has intervened in the currency markets by buying dollars and selling yen in an attempt to halt the surge in the value of the yen. Yesterday, the yen spiked again, hitting a 15-year high against the dollar -- since June 2007 the yen has gained 50% against the greenback.

"We have conducted an intervention in order to suppress excessive fluctuations in the currency market," Japan's finance minister said in a news conference. "Our country's economy is still in a very severe situation with continued deflation," he added. While the size of the intervention has not been disclosed, TheWall Street Journal reports that the government has sold 200 billion to 300 billion yen ($2.4 billion to $3.6 billion).

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Today the yen tumbled as much as 3% in today's trading, its biggest fall in 19 months, and relieved investors plowed money into Japanese exporters that sell big ticket items abroad and benefit directly from a fall in the yen. Car companies surged with Mazda rallying 6.4% and Fuji Heavy Industry, maker of the trusty Subaru, climbing 4.9%. Honda soared 4%, Toyota gained 3.8% and Nissan added 3.7%.

Firms supplying parts to the auto industry also motored ahead with Jtekt, part of the Toyota Group and a maker of car parts, rising 3.7%. Asahi Glass advanced 3.3%, Alps, a car electronics manufacturer added 3.2% and Bridgestone gained 2.8%.

Among electronics makers Pioneer surged 5%, Sony rocketed up 4.1% and Panasonic made a 2.5% gain. Camera company Konica Minolta, which also makes medical equipment and personal computing items, rose 4% and Canon, a major exporter, advanced 1.9%.

Fanuc, a maker of the industrial robots now staffing factories from the U.S. to China, climbed 3.3%.

In Hong Kong, it was a rise in the price of gold that gave stocks a boost. Gold reached a record high of $1,274.95 yesterday, sending Zhaojin Mining Industry up 4.1%, Real Gold Mining up 3% and Zijin Mining Group up 1.4%. But gains were tempered by losses among other mining companies, including Chalco, officially named Aluminum Corp. of China, which slumped 2.1% and coal energy company China Shenhua Energy, which declined 0.8%.

News that U.S. shoppers increased their spending in August helped Hong Kong fashion exporters rise. Yue Yuen, the sports shoe super-producer, leaped 5.3%, Esprit gained 1% and Li & Fung rose 0.7%. But Belle International, maker of shoes including Joy & Peace and Staccato, bucked the trend today losing 0.8%.

In China, newly instated curbs on coal production stripped value from Chinese coal companies. Yanzhou Coal Mining slumped 2.6%, Datong Coal Industry sank 2.3% and China Shenhua Energy tumbled 2.2%.

Meanwhile, added stress over Chinese property investment restrictions sent the real estate sector sliding with Poly Real Estate sinking 2.1%, Gemdale falling 2% and China Vanke down 1.7%.