TOKYO: Japan is ready to take action against a further surge in the yen, including market intervention, after the safehaven Japanese currency hit a post-war record high, local media reported yesterday. The government and the Bank of Japan had started discussions over fresh intervention to sell yen and buy dollars on the foreign exchange market, the Nikkei business daily reported.
Japan was ready to intervene and sell yen even on overseas markets if it detected speculative moves to drive the currency higher, according to an unnamed senior finance ministry official, Yomiuri Shimbun said.
The mass-circulation daily also said that the central bank was separately considering further monetary easing in tandem with the government’s possible yen-selling action.
The US dollar slumped to 75.95 yen in intraday trade Friday, beating its previous post-World War II low of 76.25, which it reached days after the March 11 earthquake and tsunami hit Japan.
Investors were flocking to the Japanese currency, seen as a safe-haven unit together with the Swiss franc, amid deepening concern over another possible global recession, traders said.
Because a strong yen would hurt Japanese exporters, the nation’s main economic engine, Japan stepped into the foreign exchange market earlier this month to dump yen for dollars, and Tokyo had previously signalled that it mightdo so again.
“The government and the Bank of Japan do not hesitate to carry out market intervention but as seen in the last case, the impact of intervention is unlikely to last long,” the Asahi Shimbun said.
Official data on Monday showed that Japan’s economy shrank less than expected in the April-June quarter, fuelling hopes that its recovery from the March 11 quake and tsunami disasters was on track.
Finance Minister Yoshihiko Noda also predicted that Asia’s second-biggest economy looked likely to grow again in the July to September quarter but also warned of the risk posed by the strong yen to exports and growth.
Noda said that the government would consider what long-term policies were needed to soften the economic impact of the yen if it remained at its current high levels. — AFP