The yen may fall after a Japanese Ministry of Finance official described as excessive its rise to a three-month high this week and said the government may sell the currency during this week's holidays.
"The yen is getting too strong for the Ministry's liking and that gives rise to talk" the government may sell yen, said Steve Barrow, a currency strategist at Bear Stearns International. "The dollar is weakening against all currencies because there aren't many good reasons to invest in the US."
The yen traded against the dollar at Japanese Yen 118.85 at 12:06am in London, compared with Japanese Yen 118.78 late Tuesday in New York. Against the euro the currency traded at Japanese Yen 124.41, compared with Japanese Yen 124.33. Japan's currency rose almost 11 percent against the dollar last year, eroding company profits on exports.
"Although there seems to be speculation that it would be difficult to take action during Japanese holidays, it is completely wrong," the official said. He asked not to be identified.
Japan last sold yen on June 28, when the greenback traded between Japanese Yen 118.40 and Japanese Yen 120.26.
Japan's government in late December cut its export growth forecast to 2 percent for the year that begins April 1, from a projected 5.4 percent this fiscal year. The Bank of Japan sold Japanese Yen 4 trillion (US$33 billion) in May and June to weaken the currency.
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