• Bloomberg


Finance Minister Yoshihiko Noda said Wednesday that one-sided moves in the yen can hurt growth as the currency strengthened against the dollar to close to the level where authorities intervened last week.

“Recent one-sided movements in the currency market risk hurting the economy’s recovery from the earthquake,” Noda said during a Diet committee session, reiterating remarks made Aug. 4, when authorities sold the yen. The government may include measures to help companies combat the strong yen in its next reconstruction package, Chief Cabinet Secretary Yukio Edano said.

A global stock rout that has erased more than $6 trillion off equities in the past two weeks has bolstered the yen’s appeal as a safe haven, undoing intervention that helped the currency weaken past ¥80 last week. Policymakers may struggle to reverse the trend with more unilateral yen sales after last week’s action prompted criticism from the European Central Bank, according to economist Naoki Iizuka.

“Last week’s intervention was effective to some extent, but it’ll be difficult to take further steps unless there is support from the G-7,” said Iizuka, a senior economist at Mizuho Securities Co. in Tokyo. “We can’t rule out more aggressive easing from the U.S. and that’ll lead to a stronger yen.”

The yen traded at 76.89 per dollar as of 11:10 a.m. Wednesday in Tokyo. The currency strengthened to ¥76.97 on the day authorities stepped in for the first time since March, after earlier that week trading as high as ¥76.30. A postwar record of ¥76.25 was set in March.

Speaking at a news conference in Tokyo, Edano said the yen’s strength has been driven by global rather than domestic factors. The government is in the process of compiling its third reconstruction package from the March earthquake and tsunami.

The currency appreciated against the dollar Wednesday after the Federal Reserve pledged to keep its benchmark rate at a record low at least through mid-2013 to revive the economy.

Analysts estimate Japanese authorities spent a record ¥4.5 trillion to weaken the currency last week. ECB President Jean-Claude Trichet said intervention must be made on a multilateral consensus, a sign he disapproved of Japan’s action.

The yen has appreciated 4.6 percent in the past month, making it the best performer after the Swiss franc among 10 currencies tracked by Bloomberg.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.