UPDATE:Japan Fujii Steps Up Rhetoric As Dollar Dips Below Y85
By Takashi Nakamichi, OF DOW JONES NEWSWIRES
TOKYO -(Dow Jones)- Japan's finance minister stepped up his rhetoric against
excessive yen rises on Friday, calling the currency's recent climb "one-sided"
and threatening to intervene in foreign-exchange markets if the rapid ascent
continues.
"There's no doubt that (the yen's recent appreciation) is one-sided," Hirohisa
Fujii told a news conference after the dollar tumbled more than one and a half
yen to a 14-year low of Y84.82 in early Asian hours.
"If this kind of situation is sustained, I think that it would be something
abnormal ... it would be possible for us to take" steps under such conditions,
he added.
The tone of the finance minister's language was its strongest to date,
underscoring how worried he has become about the potential damage from the
rising domestic currency on Japan's export-reliant economy.
Fujii expressed his view that the international community would find any
Japanese action against abnormal market movements reasonable.
"We should take appropriate action against disorderly movements in order to
stabilize international financial markets," Fujii said. "That's what we
naturally should do. It's an international agreement, and we are part of it."
But in a possible sign that Japanese yen-selling intervention isn't imminent
yet, Fujii added: "Let me look at the situation for a bit more to figure out
whether the current situation is what (the Group of Seven leading nations)
consider to be 'disorderly.'"
Fujii also declined to offer any clear comments on whether he is mulling
intervention or whether he thinks any such steps would be effective.
Already beset by a range of problems from deflation to a rising budget
deficit, Japan now appears highly aware of the yen's gains. A stronger yen
threatens the nation's still-embryonic recovery, by making Japanese exports more
expensive abroad while reducing the value of revenue earned overseas when
converted into the domestic currency.
The negative effects on Japan's economy of the recently soaring yen "are in no
doubt far larger" than its positive impact, Fujii said.
Fujii said that he will contact U.S. and European currency policymakers when
necessary. He hinted that if needed, he may even consider calling on other G-7
nations to issue a statement against rapid yen rises, as the group did in
October 2008.
The dollar's plunge came as investors piled into the yen on the view it offers
the safest haven amid falling Asian share prices and concerns over global banks&
#8217; exposure to the debt problems of a real-estate subsidiary of Dubai's
state-run Dubai World.
The U.S. currency's broad weakness, caused by expectations that the U.S.
Federal Reserve may keep its interest rates near zero for some time to support
the country's economic improvement, is also putting upward pressure on the yen
against the greenback.
The reasons behind the yen's gains, Fujii said, are "very complicated."
-By Takashi Nakamichi, Dow Jones Newswires; 813-6895-7558; takashi.nakamichi@
dowjones.com
(END) Dow Jones Newswires
11-26-092104ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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