Japan’s Finance Minister Jun Azumi said yesterday that Japan will secure an additional ￥15 trillion (US$195.79 billion) in funds it can use to intervene in currency markets, warning it will act against speculative moves on the yen.
Azumi added that the finance ministry would require currency traders to report daily their trading positions for another three months beyond the end of last month in a bid to deter speculative moves.
Japan will boost the size of its intervention funds by ￥15 trillion to “flexibly” respond to the yen’s upward trend, Azumi said.
Azumi said the government will make necessary arrangement to raise intervention funds under the planned third extra budget for fiscal 2011.
In August, the ministry and the Bank of Japan intervened in the market, selling ￥4.51 trillion for US dollars in a bid to weaken the Japanese unit.
However, the move, as with previous interventions in September last year and in March with the support of the G7 nations, failed to deter the yen’s rise to a postwar high of ￥75.95 against the US dollar and a 10-year high versus the euro.
The strength of the unit has raised fears of a “hollowing out” of Japanese industry as manufacturers, seeing repatriated profits eroded, shift more of their production overseas in search of cheaper labor costs.
Demand for the yen from Japanese exporters at the end of the first fiscal half pushed the unit higher against the US dollar yesterday, with the greenback retreating to ￥76.54 from ￥76.79 in New York late on Thursday.
The yen’s strength has threatened to impede Japan’s recovery from the impact of the March 11 earthquake and tsunami.
Government data showed yesterday that Japan’s industrial output rose less than expected and household spending plunged in August.
Factory production rose by 0.8 percent in August on-month, the fifth straight monthly gain since plunging in the wake of the tsunami that crippled component supply chains and led to the shutdown of factories. However, the data missed expectations of a 1.5 percent gain.
Meanwhile consumer spending, accounting for just under two-thirds of the economy, continued to slide.
Yesterday’s data showed household spending fell 4.1 percent in August on-year, missing forecasts of a 2.9 percent fall.
“We cannot be optimistic about the outlook,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
“Japanese firms are cautious amid uncertainties overseas and a stronger yen,” Shinke said.
Separate government data yesterday showed Japan’s core consumer prices increased 0.2 percent in August from a year earlier, beating market expectations of a 0.1 percent increase, while the jobless rate stood at 4.3 percent in August, down 0.4 percentage points from the previous month.
The core consumer price index, which excludes volatile food prices, has risen in part because of an increase in energy costs, but Japan in general remains mired in a deflationary trend of falling prices.
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