Investors at the Tokyo stock exchange are unnerved because the Nikkei known as the barometer of Japanese stocks plummeted to incredible lows unseen since the 80s of the last century. This abrupt nosedive surpassed the notorious Black Monday of 1987.
This time, the Nikkei tumbled by more than 11.8%, scaring investors with the prospect of a US recession and the yen turning into a powerful samurai against the US dollar.
Japan’s key stock index slumped to 31,667.65 points, losing a record 4,000 points in one day! It is a steeper slump than the 3,836.33 points lost in 1987. It seems that the Nikkei has decided to set new bearish records.
In the meantime, Japan’s financial authorities allocated 5.5 trillion yen (about $36.6 billion) for currency interventions in July. They strive to safeguard the yen from daring speculators. Judging by the aftermath, it was a tough challenge.
As the cherry on the cake, on July 31, the Bank of Japan eventually gave up its long-standing ultra-loose monetary policy and hiked the key interest rate from a minor 0-0.1% to 0.25%. It marks the highest level since late 2008. The second rate hike this year clearly indicates that the regulator has decided not to drop the reins but to shift cautiously to hawkish rhetoric.
