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Friday, 5 August 2011 00:01 - - {{hitsCtrl.values.hits}}
TOKYO (AFP): Japan on Thursday intervened in currency markets to weaken the yen, the government said, in a bid to counter speculator-driven rises that had pushed the unit near its post-war high against the dollar.
The yen started to fall shortly after 0100 GMT, and the dollar rose sharply to 78.45 yen from 76.99 earlier. The Japanese unit also fell against the euro, with the single currency fetching 112.16 from an earlier 110.45.
However, the initial impact of the move by Japan was seen to fade slightly by 0150, with the yen rising back to 78.35 to the dollar.
Finance Minister Yoshihiko Noda confirmed that Japan intervened unilaterally in the foreign exchange market to counter what he called “one-sided” and “excessive” movements in the currency.
“If the moves continue, it could negatively impact the Japanese economy and financial stability when Japan is making various efforts to reconstruct itself from the impact of the disaster,” Noda told reporters, referring to the March earthquake and tsunami.
“Therefore we carried out currency intervention. Now we will watch market movements closely.”The Bank of Japan shortened its scheduled two-day meeting that was due to conclude on Friday and was instead expected to decide on further monetary easing later on Thursday.
The last time Japan intervened was in March with its G7 counterparts after the yen hit a post-war high of 76.25 to the dollar following the earthquake-tsunami disaster.
In April the yen had fallen to the mid-85 level against the dollar.
But the impact of that move has been eroded as investors buy the safe-haven yen despite Japan’s own economic weakness and massive government debt, amid fears for European economies and worries that the United States faces a downgrade.
Japanese authorities recently raised their rhetoric against the soaring currency. Noda on Tuesday said the yen was “overvalued”.
Japan’s faster-than-expected recovery from the impact of the March earthquake and tsunami has been overshadowed by a soaring yen that threatens the post-disaster rebound of exporters.
A strong yen erodes repatriated earnings and makes it harder for companies to make money on products made in Japan and sold overseas, prompting some companies to shift more production overseas, resulting in fewer jobs at home.
