"Sakakibara told the financial-news channel he thought US Treasury Secretary Timothy Geithner wants a “gradual decline” of the dollar to correct large trade imbalances, and wouldn’t be inclined to intervene now" Friday 27/11/2009 November, 2009,
Japan mulls action to stem soaring yen
Japan’s Prime Minister Yukio Hatoyama yesterday said the government must take measures to avoid a double-dip recession after the US dollar tumbled to a 14-year low against the Japanese yen.
“We must take measures so that the economy will not fall into a double-dip” recession, said Hatoyama, without specifying what measures his government may take to boost the world’s second largest economy.
The premier stressed that “rapid and drastic movements in foreign exchange are not desirable” but added that the day’s fluctuations were due mainly to the fall of the dollar rather than a rise of the yen.
The greenback briefly dropped to 86.28 yen, its lowest level since it traded at 84.92 yen on July 7, 1995.
The yen rallied against the dollar on speculation Japanese monetary authorities will tolerate further appreciation of the currency.
“The Japanese authorities probably won’t step in unless we see an acceleration of the move below 85” yen per dollar, said David Deddouche, a foreign-exchange strategist in Paris at Societe Generale SA.
The last intervention took place on March 16, 2004 when the Bank of Japan sold 67.8bn yen ($782mn) for dollars, according Derek Halpenny, European head of currency strategy at Bank of Tokyo-Mitsubishi UFJ.
“I am watching these movements, right now it’s time to watch them closely,” Finance Minister Hirohisa Fujii told reporters in Tokyo yesterday. “We need to take appropriate action against abnormal movements.”
**Eisuke Sakakibara, formerly Japan’s head foreign-exchange official, said in a CNBC interview on Wednesday that the US dollar may fall as low as 85 yen and the Japanese government might consider intervention at this amount.
Sakakibara told the financial-news channel he thought US Treasury Secretary Timothy Geithner wants a “gradual decline” of the dollar to correct large trade imbalances, and wouldn’t be inclined to intervene now.
Large Japanese manufacturers expected the yen to average 94.50 per dollar in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey released on October 1.
Agencies/Tokyo
