Bank of Japan Governor Masaaki Shirakawa said in an interview published yesterday that the government’s intervention in currency markets to stem the yen’s surge was the “appropriate decision.”
In an interview with the Yomiuri Shimbun newspaper, Shirakawa defended Japan’s currency intervention last week to stem the yen’s surge against the dollar to 15-year highs.
“It was an appropriate decision given the situation surrounding the economy. We support the government’s stance,” he said.
DOWNSIDE RISK
Japan’s central bank will continue to supply funds to the markets, he added, warning of a downside risk to the nation’s fragile economic recovery.
“We will supply ample funds, including funds for currency intervention. This stance will remain unchanged in the future,” Shirakawa said.
Japan stepped into the currency markets on Sept. 15 for the first time since 2004 in a bid to stem a strong yen after it hit a fresh 15-year high against the dollar of ¥82.86.
The move drew criticism from some politicians in Europe and the US, but the government has repeatedly said it was ready to act again in currency markets if necessary.
DRASTIC CHANGE
“If there is a drastic change [in the currency], such intervention is unavoidable,” Japanese Prime Minister Naoto Kan said in an interview with the Financial Times published yesterday
Kan told the newspaper that there was a “common recognition” among G20 nations that overly rapid currency movements were undesirable and that he would seek to promote understanding of Japan’s action in New York.
He was heading to New York yesterday to attend the UN General Assembly.
A strong yen puts Japanese exporters at a disadvantage because it erodes their repatriated earnings and competitiveness, in turn threatening the nation’s fragile growth.
“Uncertainty over the outlook [of the global economy] is increasing more than ever,” Shirakawa said, highlighting weak US economic data for last month.
“We need to be aware of the downside risk” to the Japanese economy such as deterioration “in exports, corporate earnings and business sentiment,” he added.
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