Sun, Aug 21, 2011 - Page 11 News List

Japan looks at new currency market intervention: ‘Nikkei’

Reuters, TOKYO

Japan is considering intervening in the currency market again to stem further yen gains after the currency’s overnight ascent to a fresh record-high against the US dollar, the Nikkei Shimbun newspaper said yesterday.

If the yen continues to rise, Japanese authorities would step into the market to weaken the currency and would seek understanding from its G7 counterparts, the paper said without citing sources.

Growing volatility in global markets has raised investors’ appetite for safe-haven currencies like the yen, pushing down the US dollar to a record-low against the Japanese currency on Friday. It bounced back above ¥76 after falling below its previous record low of ¥76.25 set in March.

If the appreciation of the yen persists, the Bank of Japan could also ease monetary policy to support government efforts to weaken the currency at its rate review next month or even earlier, sources familiar with the central bank’s thinking say.

Japanese policymakers have continued to issue verbal warnings of intervention to stem sharp yen gains, while the bank has signaled its readiness to ease further if sharp yen rises hurt business sentiment and threaten the prospect of economic recovery.

Some in the central bank do not rule out easing policy at an emergency meeting this month, although this is unlikely unless yen gains are sharp enough to trigger currency intervention, and are accompanied by big falls in Tokyo share prices.

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