Asian indexes fell Wednesday across the board after traders were spooked by the dropoff in U.S. markets when the Fed dropped its target rate 0.25%, disappointing those who had hoped for a more robust 0.5% cut (full story I, II).
Shanghai's Composite Index fell 1.54%.
"I think Tokyo is reacting more to Wall Street's negative reaction than to the Fed's decision itself," said Yosuke Shimizu of Monex Inc.
The yen declined against all 16 of the most-active currencies as traders speculated investors will begin moving holdings out of a weaker Japanese market into higher-yielding overseas markets. "Winter bonuses will be paid out and retail investors may buy high-yielding assets," one analyst said. "This should be supportive of foreign currencies against the yen." On Tuesday Bank of America forecasted December Japan capital outflows at $7.2 billion; it cut its yen forecast to 110/dollar from 108.
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