Intervention nontopic in Kan-Shirakawa chat

by Jun Hongo

Prime Minister Naoto Kan and Bank of Japan Gov. Masaaki Shirakawa on Monday exchanged views on the country’s economy and the impact of the strong yen, but they didn’t touch on intervening in the currency market, Chief Cabinet Secretary Yoshito Sengoku said.

According to Sengoku, the top government spokesman, the two spoke for 15 minutes by phone and “shared their thoughts on economic conditions, including the foreign exchange market.”

Kan and Shirakawa agreed that the two sides should remain in touch, Sengoku said.

The yen climbed to a 15-year high against the dollar earlier this month, hitting ¥84.72, threatening Japan’s exporters and inducing a sharp drop in the Nikkei 225 stock average.

But while Sengoku said the two could set up a gathering to speak in person soon, they conversation Monday didn’t include government intervention in the currency market.

The topic “did not come up at all during today’s phone meeting,” Sengoku said without giving specific details of the conversation.

He declined to comment on whether monetary easing came up.

Kan has ordered his Cabinet to come up with fresh measures to stimulate the economy, as some fear that a strong yen could further erode Japan’s already weakening gross domestic product. The GDP growth rate came in at anemic annualized 0.4 percent pace in the three months that ended June 30.

While the Kan administration has laid the groundwork for an emergency stimulus package to tackle the slowdown in growth, some have speculated that the government could also respond to the surging yen by intervening in the currency market.