Bank of Japan Gov. Masaru Hayami on Thursday endorsed Japan’s yen-selling intervention the day before, which was aimed at moderating market exuberance.
“It can be said that exchange rates have been moving too rapidly,” Hayami said during his regularly scheduled news conference. “I think it is good that the necessary actions were taken from the point of view of maintaining stability.”
The yen hit a high for the year of 123.50 to the dollar Wednesday before the intervention. It was trading at 124.25 to the dollar at 5 p.m. Thursday.
While a weaker yen would help exporters, Hayami, known as a strong yen advocate, cautioned that he “does not believe the yen is a weak currency.”
He pointed to the quality of Japan’s labor and technology, and the nation’s success at maintaining a current account surplus since the 1980s. The current account is the broadest gauge of trade in goods and services, and shows the difference between a nation’s income from foreign sources and foreign obligations payable, excluding net capital investment.
Intervention alone will not move exchange rates that easily, however, Hayami said. “Just because the currency markets move, it does not mean intervention will automatically follow.”
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