Finance Minister Hiroshi Mitsuzuka repeated Friday his intent to take timely action against the yen’s excessive weakness. The yen’s fall against the dollar until Thursday was “apparently excessive,” Mitsuzuka told reporters after a regular Cabinet meeting.
He made similar remarks Thursday, which promptly dampened dealers’ zeal to buy dollars and halted the yen’s fall against the greenback.
“The stability of foreign exchange rates is not only an important factor for the global economy, but also for the Japanese economy. The (yen-dollar) level we were seeing yesterday was excessive,” the finance chief said. The reason behind the yen’s weakness is a disparity in long-term interest rates between Japan and the United States, dealers said.
Dealers share a strong belief that Tokyo will not raise rates anytime soon due to the need to continue indirect support for ailing domestic financial institutions, they said. Another factor is the need to keep Japanese capital flowing into U.S. stock and bond markets and to support the U.S. economy, they said.
But Eisuke Sakakibara, director general of the Finance Ministry’s International Finance Bureau, reportedly expressed concern Thursday afternoon that a weak yen could boost Japan’s external surpluses, which have already begun to rise on a year-on-year basis.