RTTN: Japan Increasingly Concerned About Strong Yen
(RTTNews) - Japan's concerns about a strong yen became more pronounced on Thursday, when the Bank of Japan Governor Masaaki Shirakawa sharpened his tone on the exchange rate.
"There are substantial fluctuations in the foreign exchange and stock markets mainly against the backdrop of growing uncertainty about the outlook for the U.S. Economy," Shirakawa said in a statement. "The Bank of Japan will carefully monitor such developments and their effects on Japan's economy."
Shirakawa became more concerned today than he was on Tuesday, when he said the Japanese economy is moving in line with the Bank of Japan's assessment, despite the strong yen threatening the fragile recovery.
The BoJ chief earlier said the appreciation of the yen could hurt business sentiment and push down corporate profits in the short term. He also noted that yen exchange rate dominated Tuesday's policy meeting as a strong currency leaves big impacts on the economy. But now he is more concerned about the country's strong currency.
Also on Thursday, Japanese Finance Minister Yoshihiko Noda refrained from commenting what measures the government will take to arrest the rising yen. He said the government will monitor economic conditions carefully and respond appropriately. The Japanese government has not intervened in the currency market since March 2004.
Noda said on Tuesday that he wants the BoJ to cooperate with the government more closely than before to address problems such as the strong yen or deflation. There has been some speculation over the last week that the BoJ may take some measures to counter the yen's rise.
The Japanese yen, which has been in an upward channel against the U.S. dollar since early May this year, advanced to its highest level in more than 15-years on Wednesday, but pared some of its gains in late Asian trading today. The yen thus depreciated by 1.2% to reach a 2-day low of 85.81 against the greenback around 3:30 am ET Thursday and lacked a clear direction thereafter. The dollar-yen pair is presently trading near Wednesday's closing quote of 85.33.
