By Kosaku Narioka
Japanese auto stocks fell sharply as the yen rebounded to a one-month high due to growing expectations that the Bank of Japan could shift away from its ultra-low interest rate policy.
Nissan Motor shares were recently 5.6% lower, Mazda Motor shares were down 6.1% and Toyota Motor shares were 2.9% lower on Thursday afternoon.
The Japanese yen strengthened to 148.41 yen against the dollar earlier, its strongest level since Feb. 8, from 149.41 as of Wednesday 5 p.m. Eastern Time after BOJ policy board member Junko Nakagawa said Thursday that the Japanese economy is making steady progress toward achieving its price goal.
There is an growing chance that companies will provide higher pay increases at annual wage negotiations, she said. Her comments added to expectations the central bank will end its negative interest rates in coming months.
For years, the yen's weakness had helped lift earnings for Japanese carmakers as it makes exports more competitive abroad and boosts the value of profits earned overseas in yen terms.
Expectations for an imminent policy change by the BOJ grew last week when policy board member Hajime Takata said it should start discussing a possible exit from its ultra-loose monetary policy.
The BOJ's policy board is scheduled to hold its next policy-setting meeting on March 18-19.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
03-07-24 0043ET
