TOKYO -- The U.S. dollar hit a four-year low against the Japanese yen Wednesday while Tokyo stocks ended slightly higher to cap the market's best fiscal year in three decades.
The benchmark share index finished the Japanese fiscal year up almost 47 percent, its best annual performance since fiscal 1972.
The U.S. dollar was trading at 103.95 yen by late afternoon Wednesday, down 1.82 yen from Tuesday and also below the 105.58 yen it bought in New York. The U.S. currency fluctuated between 103.75 yen and 105.92 yen during Tokyo trading hours.
The Nikkei Stock Average of 225 issues closed up 21.71 points, or 0.19 percent, at 11,715.39, erasing most of a 24.56 point loss Tuesday.
The dollar's tumble weighed on the market Wednesday but the blue-chip index finished Japan's April-to-March fiscal year up 46.7 percent. That was its best performance since fiscal 1972, when it rose 64 percent, and reflected rising optimism among foreign investors that the world's second-largest economy may finally be on a growth track.
That optimism has been tempered by concern, however, that the falling dollar could derail a recovery.
Dollar selling attributed to foreign speculators pushed the U.S. currency below 104 yen in Tokyo on Wednesday for the first time since April 17, 2000 on expectations that Japanese authorities would be unlikely to intervene aggressively in the market to prop up the U.S. currency.
Some analysts said Japan's Ministry of Finance would be reluctant to be seen manipulating the currency market on the same day Japanese companies book their profits. A stronger dollar means Japanese exporters earn more yen from their sales in the United States but also makes U.S. exports less price competitive.
Japanese currency authorities probably decided not to "risk angering the U.S." by intervening actively Wednesday when the dollar started its tumble, said Tohru Sasaki, a strategist at J.P. Morgan in Tokyo.
Sasaki added that recent signs of recovery by the world's second-largest economy have eased pressure on Japan to try to weaken the yen.
Japanese Finance Minister Sadakazu Tanigaki reiterated that his ministry would "take appropriate action" if exchange rates diverged from economic fundamentals.
On the stock market, the dollar's fall weighed on shares in exporters but the Nikkei crawled into positive territory on gains by banks, builders, steelmakers and other sectors whose earnings depend heavily on Japan's domestic economy.
Norihiro Fujito, a strategist at Mitsubishi Securities, said the Nikkei's impressive fiscal-year performance reflected a "dramatic shift" by Japan toward restructuring its economy. Fujito credited efforts by banks to dispose of masses of bad loans left after the implosion of speculative bubbles in the early 1990s.
Gainers Wednesday included Mizuho Financial Group, real estate developer Mitsubishi Estate and Kobe Steel.
The broader index of all issues on the Tokyo Stock Exchange's first section rose 3.72 points, or 0.32 percent, to close at 1,179.23. The index lost 3.66 points, or 0.31 percent, on Tuesday.
Rising stocks outnumbered decliners 955 to 471, while 129 issues ended unchanged.
An estimated 1.258 billion shares changed hands, down from 1.301 billion shares Tuesday.
In other currencies, the euro rose to $1.2240 late Wednesday in Tokyo, from $1.2202 Tuesday. Against the yen, the European currency was quoted at 127.18 yen, down from 128.90 yen.
The yield on Japan's benchmark 10-year government bond fell to 1.4350 percent from 1.4500 percent late Tuesday. Its price rose 0.13 to 98.82 points.
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