Action in currency market possible: Fujii

Finance Minister Hirohisa Fujii said Tuesday the government may act to stabilize the foreign exchange market should currency movements become irregular.

"If the currency market moves abnormally, we may take necessary steps in the national interest," Fujii said at a news conference. He denied saying he tolerates a stronger yen.

Fujii is seeking to clarify his stance on the yen after it surged to an eight-month high Monday. Since taking the post two weeks ago, Fujii has he doesn't support a "weak yen" and he opposes governments stepping into currency markets "in principle."

The yen has gained about 16 percent in the past year, making Japanese products shipped abroad more expensive and eroding the value of repatriated profits.

The Democratic Party of Japan has said a stronger currency may benefit households by making imported goods cheaper.

Fujii, 77, said that recent currency moves have been too sudden and intervention remains possible, according to Jiji Press. At the same time, he said at the briefing that history shows yen-devaluation policies hurt the global economy.

World leaders agreed in London this year that countries shouldn't compete to devalue their currencies, Fujii said. "That decision is quite right."

At a forum cohosted Monday, he said he "never said I will leave the yen to strengthen" and he didn't necessarily accept gains in the currency. He also said foreign exchange moves "have been somewhat one-sided recently."

The foreign exchange market shouldn't react excessively, Fujii said Tuesday. The yen fell to 89.98 per dollar at 11:55 a.m. in Tokyo after Monday touching 88.24, the strongest level since Jan. 23.

Eiji Hirano, a former Bank of Japan executive director, said Fujii intends to retain the option of selling the yen should it gain excessively.

"I don't think Minister Fujii meant he has ruled out intervention completely," Hirano said in interview Friday. "If the yen advances drastically and people panic, intervention can't be ruled out."

Japan hasn't stepped into the foreign exchange market since the first quarter of 2004, when the BOJ at the behest of the Finance Ministry sold a record ¥14.8 trillion to weaken the currency.

Hirano, who is now a director at Toyota Financial Services Corp., said current market moves don't warrant action and the yen may depreciate over time because the economy is likely to weaken as the population shrinks and ages.

According to some investors, the DPJ's support for households indicates it's more willing to allow a stronger yen than its predecessor in government, the Liberal Democratic Party.

'Yen not spiking'

Toyoo Gyohten, a new currency adviser to the Finance Ministry, said Tuesday the yen's value has not spiked recently.

"I don't think it is rising rapidly," Gyohten said ministry after attending a ceremony marking his appointment as special adviser on foreign exchange issues by Finance Minister Hirohisa Fujii.

"I don't perceive that the foreign exchange market is destabilizing," he said when asked about the yen's appreciation Monday against the dollar to a nine-month high.