WSJ:Japan Watches Euro, But Little Action Expected
By TAKASHI NAKAMICHI
TOKYO—Japanese cabinet ministers kicked off their first meeting of 2012 voicing concerns over the euro's fall, but traders still see little chance of imminent action by Tokyo to force the European currency higher to prop up the nation's decelerating export-led economy.
"The euro weakness could have a very big impact on our country's industries that are focused on exporting products to Europe," Finance Minister Jun Azumi said at a news conference after the first cabinet meeting of the year. "We are currently carefully monitoring the foreign exchange market."
The euro fell to a fresh 11-year low of ¥98.45 Thursday, and was trading at ¥98.61 Friday afternoon in Tokyo. Euro weakness renders Japanese goods less competitive in European Union nations, which buy roughly 10% of Japanese exports.
Japan is trying to help European leaders tackle their sovereign debt turmoil—the main culprit for a falling euro-yen rate—on its own ways. The nation's Finance Ministry bought 10% of the €3-billion three-year bonds issued Thursday by the euro-zone bailout fund, a Japanese government official said Friday.
The purchasing ratio is below 13.2% in December's auction of shorter-term debt by the European Financial Stability Facility. But the move may be reassuring to European leaders, as Japan has been a main EFSF debt buyer ever since the fund began selling bonds early last year.
Meanwhile, in a sign of government efforts not to stoke euro weakness, Chief Cabinet Secretary Osamu Fujimura said Friday he has reprimanded Consumer Affairs Minister Kenji Yamaoka for openly forecasting the currency's near-term demise.
Mr. Yamaoka was quoted by the Nikkei as saying in his New Year address to Cabinet Office officials Thursday that "the euro may fall apart this year." It is highly unusual for a Japanese cabinet minister to express such strong pessimism toward a particular currency.
Mr. Fujimura called Mr. Yamaoka's comment "inappropriate," adding that "I've told the minister to be very careful when making comments."
Few traders expect imminent actions by Tokyo to bolster the euro on views that European governments wouldn't like such actions.
While the euro's levels versus the yen look too low, its decline "is in line with Europe's economic movement and policy," said Koji Fukaya, chief currency strategist at Credit Suisse. "They may complain publicly" if Tokyo intervenes to strengthen the euro, he said.
Hopes by some Japanese officials that a European Central Bank shuffle might lead the bank to soften its general opposition to unilateral interventions by Tokyo appeared to be dashed this week.
They had expected that Benoit Coeure, a Japanese-speaking French official whom they consider relatively sympathetic to Tokyo's currency concerns, would become the bank's new chief currency policy diplomat. But the bank said Tuesday it had given the position to Germany's Joerg Asmussen instead, and made Mr. Coeure responsible for open market operations.
