Incoming Prime Minister Yoshihiko Noda oversaw Japan's biggest currency intervention in seven years last month as finance minister, but he may have to take even bolder steps to rein in the yen.
The government sold ¥4.51 trillion in the currency market during August, according to a statement released Wednesday by the Finance Ministry, the largest monthly total since March 2004. Noda, who was elected prime minister in the Diet on Tuesday, faces pressure to reverse three straight quarters of economic contraction, largely due to the yen's advance to a postwar high against the dollar, hitting the earnings of exporters.
"Intervention won't stop the strong yen trend," said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. "Policymakers need to do something drastic, something that can hurt the market players so much that it will change the yen's rising direction."