Japan hints at intervention, more easing
Source: Agencies |
August 4, 2011, Thursday
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Print Edition
Print Edition
JAPAN kept markets on guard for currency intervention and more monetary easing yesterday, with the finance minister vowing to stem the yen's rise and the prime minister calling for central bank action to protect the economy.
The yen held broadly steady against the dollar as recent repeated jawboning by Japanese authorities kept markets wary of intervention, while a deal to raise the United States debt limit eased pressure on the greenback.
While verbal intervention reached fever pitch, Prime Minister Naoto Kan called for the Bank of Japan's support a day before its two-day rate review, a sign that monetary loosening could be on the cards even if Tokyo chooses to hold off with selling yen just yet.
"Japan's economy is in the process of recovering from disaster, so we must closely watch currency moves. We want the BOJ to continue to support the economy," Kan told a regular meeting of the cabinet to discuss risks to the economy, which the central bank governor attended.
Japanese officials fear that the yen's near 5 percent surge in the past month will harm the economy, which skidded into its second recession in three years following the March 11 earthquake and tsunami.
BOJ Governor Masaaki Shirakawa signaled the central bank's readiness to ease policy this week, saying the board will scrutinize the negative impact that recent yen gains could have on the economy.
Lingering worries that the US faces a ratings downgrade and that Europe's debt crisis will spread further could push the yen higher again, forcing Japan to sell its currency for the third time in about a year.
"I don't think currency markets are reflecting economic fundamentals at all," Finance Minister Yoshihiko Noda told lawmakers yesterday, threatening possible intervention.
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