Japan moves to weaken yen
TOKYO, Sept 15: Japan on Wednesday stepped into the currency markets for the first time since 2004 in a bid to stem the yen`s appreciation against the dollar and help safeguard a faltering recovery.
The strident move came a day after Prime Minister Naoto Kan reaffirmed his leadership in a ruling party election victory over Ichiro Ozawa, a heavyweight political rival seen as more likely than Kan to take firm action.
The yen fell to as low as 85.52 to the dollar following the yen-selling intervention, which was triggered by the Japanese unit`s earlier surge to a fresh 15-year high of 82.86.
Kan said the yen had “reached the stage where we could not leave it untouched. So, we intervened.”
Earlier Finance Minister Yoshihiko Noda pledged further steps after weeks of trying in vain to talk the yen lower through verbal warnings.
A strong yen puts many Japanese exporters at a disadvantage against foreign rivals as it erodes their repatriated earnings and competitiveness.
Officials did not reveal the size of the intervention but Dow Jones Newswires cited traders saying Tokyo likely sold at least one trillion yen ($11.7 billion) during the day.
Authorities continued selling yen into European trading and were prepared to extend the operation into the US session, officials said.
A senior finance ministry official said Japan would step into the market in Tokyo Thursday if needed, Jiji Press reported.
Noda said the move was made unilaterally, but added Japan had been in touch with foreign governments amid qualms from Europe and the United States that exchange rates should be kept free-floating.
“Our country`s economy is still in a very severe situation with continued deflation,” said Noda. The yen`s rapid appreciation “harms the stability of the economy and finances. We cannot tolerate it.”
The Bank of Japan indicated it would leave the extra supply of yen sloshing around the money market to bolster lending and weaken the currency, instead of adopting mopping-up policies usually deployed to prevent inflation.
The currency hit an all-time high of 79.75 to the dollar in April 1995.—AFP
The following are September 16, State Bank conversion rates for foreign currency deposits, dollar bearer certificates, foreign currency bearer certificates and special US dollar bonds. US dollar Rs 85.7614
Japanese yenRs 1.0043
Pound sterlingRs 133.0502
The following is Libor rate for calculating interest on special US dollar bonds for September 15. Libor
For 6 months0.48%