TOKYO -- Tokyo investors did hear fiery comments from Washington aimed at softening the dollar but stuck with their assessment that U.S. and Japanese monetary policy will stay on divergent tracks, sending stocks higher and the yen weaker here Wednesday.
The Japanese currency depreciated to the upper 113 yen range against the greenback in Tokyo after reaching 112.08 to the dollar -- the strongest in two months -- in New York the day earlier. This pullback came despite U.S. President Donald Trump accusing China and Japan of intentionally devaluing their currencies over the course of years.
The Nikkei Stock Average rebounded from a two-day slide to close up 0.6% at 19,148 points. Trump has criticized Japan's currency policy since his election campaign last year, and investors "saw nothing new" in Tuesday's comments, an official at Bank of Tokyo-Mitsubishi UFJ said.
The stock and currency movements were supported by outlooks for Japanese and U.S. monetary policy that are likely to widen the gap in interest rates. The American economy's strength means "the expected pace of U.S. interest rate hikes -- two to three increases per year -- could accelerate, but it won't decline," said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management. The Bank of Japan's policy is seen remaining loose.
Others remain more cautious, uncertain about the U.S. president's true intentions. "If Trump points to the BOJ's yield-curve controls as an example of policies aimed at currency devaluation, the yen's appreciation could pick up," Kengo Suzuki of Mizuho Securities said.