Japan “will act decisively” to stem the yen’s sharp appreciation against other major currencies if necessary, Finance Minister Jun Azumi said Friday, indicating possible market interventions.
But because the dollar’s fall against the yen was far less sharp than expected following the U.S. Federal Reserve’s decision Thursday to take additional monetary easing steps, Azumi’s comment could be seen as no more than a simple verbal warning.
“The recent one-sided movement of the yen does not reflect Japan’s real economic conditions and cannot be overlooked,” he told reporters. “We won’t rule out any steps against excessive fluctuations, and if necessary we will act decisively.”
The dollar briefly fell to a seven-month low of ¥77.13 overnight in New York after the U.S. central bank announced a fresh round of quantitative easing to boost the economy, but the greenback regained the lost ground with investors on the alert for possible intervention by Japanese monetary authorities, dealers said.
On Friday morning in Tokyo, the U.S. currency traded at around ¥77.60.
The Finance Ministry and the Bank of Japan have refrained from intervention for nearly a year. The monetary authorities last stepped into the currency market in a five-day period through Nov. 4, after the dollar slipped to a postwar record of ¥75.32 on Oct. 31.
The yen has been purchased by investors seeking its relative safety, backed by Japan’s large current account surplus, at a time of global economic uncertainty over the sovereign debt crisis in Europe, which has spread negative impact outside the region through trade and financial channels, dragging down such emerging economies as China.
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