Japan unveils $100 bn plan to fight surging yen after Moody’s cuts rating

Friday, 26 August 2011 00:00 - - {{hitsCtrl.values.hits}}

TOKYO: Japan unveiled a $100-billion effort to help companies cope with a surging yen, signalling that officials may be resigned to the currency remaining high.

The government will release foreign-exchange reserves to the state-run Japan Bank for International Cooperation for funding to aid exporters and spur purchases overseas, Finance Minister Yoshihiko Noda told reporters in Tokyo on Wednesday. The announcement came hours after Moody’s Investors Service lowered the nation’s debt rating one step to Aa3, with a stable outlook.

The yen was trading on Wednesday at a level stronger than before officials last intervened to weaken the currency on August 4. Its rise since the March 11 earthquake to post-World War II highs is undermining the nation’s recovery after three straight quarters of economic contraction, complicating the government’s efforts to tackle its debt burden.

“The government’s message may be that businesses need to come up with their own ways to deal with the strengthening currency, that they should not hold their breath for intervention,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow. “But the reality is that the demerits of a strong yen far outweigh the merits.”

The ministry will bolster monitoring of the currency market, requiring major financial institutions to disclose trading positions through September 30, said Noda. About 30 organisations will be subject to the procedures, a ministry official told reporters in Tokyo on condition of anonymity.

The yen’s appreciation is bad for the economy and may exacerbate the nation’s fiscal woes, Thomas Byrne, a vice president at Moody’s, said at a press conference in Tokyo Wednesday.

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.