Fujii Says Japan to Contact U.S., Europe If Needed as Yen Jumps

Discussion in 'Forex' started by ASusilovic, Nov 29, 2009.

  1. Nov. 27 (Bloomberg) -- Japanese Finance Minister Hirohisa Fujii said he may contact U.S. and European officials to act on currencies, amid concern the yen’s surge to a 14-year high will hamper the economic recovery.

    “I will establish contact if necessary,” Fujii told reporters in Tokyo today, when asked whether the government has raised the issue of intervening in currency markets. Asked if the Group of Seven nations will consider issuing a statement, Fujii said: “We will do what is necessary.”

    Japan may sell yen for the first time in five years as the currency’s gain past 85 to the dollar threatens earnings at Sony Corp. and Toyota Motor Corp. and deepens deflation in the wake of the nation’s worst postwar recession. Renewed concern the global recovery will falter after Dubai sought a debt rescheduling has enhanced the allure of the yen as refuge.

    “At a time when the recovery is expected to be gradual, an appreciating yen is of extreme concern,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “I think the government will take some kind of action.”

    The currency climbed to 84.83 per dollar, the highest since July 1995, before paring its gains to trade at 86.29 at 5:21 p.m. in Tokyo. The Nikkei 225 Stock Average slid 3.2 percent, the biggest drop in eight months and the lowest close since July 13. Sony, the maker of the PlayStation 3 game machine, and Honda Motor Co., a carmaker that gets almost half of its sales in North America, led the decline.

    “Abrupt” currency movements are “undesirable,” Chief Cabinet Secretary Hirofumi Hirano told reporters in Tokyo.

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    Since yesterday, Fujii has said at least three times that the government may take “action” on any “abnormal” currency moves, language officials have used to try to curb the yen’s advance. “I’m very nervously watching” foreign-exchange markets, he said today.

    Prime Minister Yukio Hatoyama, whose Democratic Party of Japan came into office for the first time 10 weeks ago, said yesterday that currency movements were “due to a decline in the dollar rather than strength in yen.” The U.S. Dollar Index’s 7.1 percent decline against a basket of currencies this year reflects speculation the U.S. Federal Reserve will keep interest rates near zero.

    “There’s no mistake the harm is much greater” than the benefits, Fujii said, when asked about the strong yen. Those comments contrast with when he took office in September saying a stronger currency can be good for an economy because it enhances the wealth of consumers.


    Short Yen.
  2. a sure sign of bad times when people regard the yen as a safe haven