Japan’s finance minister yesterday vowed to take “decisive action” against speculative moves in currency markets after the yen hit a record high against the US dollar, Kyodo news agency reported.
The dollar touched ￥75.78 in New York on Friday, breaking its record low of ￥75.95 on Aug. 19 as yen-buying accelerated on risk aversion amid concern over the eurozone sovereign debt crisis.
“We will take decisive action against excessive, speculative moves in the market,” Finance Minister Jun Azumi told reporters, according to Kyodo.
He added that the yen’s appreciation did not reflect the actual condition of the Japanese economy, but was rather being bought for its perceived safety amid a negative outlook for the US and European economies, according to Kyodo.
“We are in a situation where the yen’s rate could wipe out the achievements of Japanese companies trying to survive,” Azumi was quoted as saying.
The stronger yen could erode the competitiveness of Japanese exporters and further damage the economy, already suffering in the aftermath of the March earthquake and tsunami.
INTERVENTION
The Tokyo government has said that it would secure an additional ￥15 trillion (US$196 billion) in funds for currency market intervention when it compiles a planned extra budget for the current fiscal year.
This move would increase the accumulated total amount that Japan’s government is allowed to borrow from the market to finance intervention to ￥165 trillion.
This means it would be able to raise an additional ￥46 trillion in the future if necessary because it has already used up ￥119 trillion of the total.
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