Japanese Finance Minister Yoshihiko Noda said it would be “difficult” to gain support for international coordination to halt the yen’s gains, signaling Japan may intervene alone if necessary.
“This is about what options we have on the assumption coordination would be difficult,” Noda said on a TV Tokyo program yesterday. “Our statements on taking ‘bold action when necessary’ cover everything.”
The yen’s advance to a 15-year high against the dollar threatens earnings at companies from Sony Corp to Toyota Motor Corp.
Sony chief executive officer Howard Stringer said this week the currency’s appreciation was a “huge handicap for us.”
Japanese Prime Minister Naoto Kan said last week the government was “ready when necessary to take bold measures” in the currency market.
Ichiro Ozawa, who has challenged Kan for the leadership of their ruling Democratic Party of Japan, said this week he would take “every measure,” including intervention, to keep the yen from rising.
“What they meant was the same,” Noda said in Tokyo. “Ultimately, it’s a matter of deciding whether or not to intervene.”
Japan views probable US opposition to currency intervention as an obstacle to selling the yen, three Japanese government officials said.
Yen sales without US backing would be a challenge, the officials said on condition of anonymity because the government discussions are private. Two of them also said volatility, rather than the current level, would be a more likely trigger for an end to the policy of refraining from sales of the currency.
Developed economies abroad are weaker than when Japan last intervened, and are themselves looking to boost exports, making it tougher for Japan to go it alone. Coordinated intervention helped set a floor for the euro in 2000 and the dollar in 1995, while Japan’s solo moves in 2003 failed to arrest its gains.
“This time, Japan isn’t the only nation having trouble, and the US and Europe also have a fire under their feet,” Takahiro Mitani, president of the Government Pension Investment Fund, and a former executive director at the Bank of Japan, said in an interview. “In that environment, it’s not easy for Japan to gain support” for intervention, he said.
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