ID :
199197
Thu, 08/04/2011 - 17:41
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https://oananews.org//node/199197
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Gov't, BOJ launch joint assault on rising yen+
TOKYO, Aug. 4 Kyodo -
The Japanese government and central bank launched a joint assault Thursday on the persistently strong yen as volatility in the currency market casts a shadow over the nation's economic outlook, with struggling exporters calling for action by the authorities.
The Finance Ministry and the Bank of Japan intervened in the foreign exchange market, apparently selling a huge amount of yen to purchase the U.S. dollar, the first such move by the country since March. The BOJ for its part decided on additional monetary easing to underpin the economy, expanding its 40 trillion yen asset purchase program to 50 trillion yen.
The coordinated action came as the yen appreciated near its postwar high against the dollar, hurting the profitability of major industries such as carmakers and high-tech firms despite the economy showing some signs of an upturn following the serious slowdown triggered by the March 11 earthquake and tsunami.
The currency intervention pushed the dollar above the 79 yen line from the lower 77 yen range.
''The yen's one-sided strength recently in the foreign exchange market has persisted,'' Finance Minister Yoshihiko Noda told reporters. ''If the trend remains, it would cause negative effects on the stability of the Japanese economy and finance, despite various efforts having been made for the reconstruction of Japan following the earthquake disaster.''
BOJ Governor Masaaki Shirakawa said separately that the bank and the government are in agreement regarding the negative aspects of a stronger yen. ''We are in an environment in which we need to be more careful about downside risks to the economy,'' Shirakawa told a press conference after a policy meeting.
Expanding the program, with which the BOJ eases credit conditions in Japan by purchasing financial assets such as government bonds and corporate debt, was necessary to ''show our policy stance'' against those risks, he said.
The BOJ acts as an agent when the Finance Ministry decides to intervene.
Noda did not clarify the amount of yen sold in the attempt to influence exchange rates or which currency had been purchased. The ministry is expected to release detailed information later this month.
It was the first intervention by Tokyo since March 18, when the monetary authorities of the Group of Seven leading economies -- including Japan, the United States and some European countries -- jointly stepped into the market to stem the yen's surge after it hit a postwar high of 76.25 against the dollar the previous day.
A unilateral intervention by Japan was last conducted in September.
Noda said Japan had consulted with the monetary authorities of some other countries before the latest intervention, but did not say whether Tokyo was able to secure their support.
The intervention was Japan's ''response against speculative and disorderly movements'' in the market, the finance minister said.
Chief Cabinet Secretary Yukio Edano, the government's top spokesman, said at a press conference that Tokyo stepped into the market at an ''appropriate time.''
Also Thursday, the BOJ additionally eased its monetary policy, expanding its 40 trillion yen asset purchase program to 50 trillion yen amid growing pressure from the government to cooperate in grappling with the yen's strength to spur the economy.
Its nine-member Policy Board voted unanimously for the decision at a one-day meeting, in which it also kept the key short-term interest rate at around zero to 0.1 percent.
''Japan's economic activity is picking up with an easing of the supply-side constraints caused by the earthquake disaster,'' the BOJ said in a statement, while warning that volatility in the currency and other financial markets could ''negatively affect corporate sentiment and economic activities in Japan.''
The policy meeting, originally scheduled for Thursday and Friday, was shortened to one day in an emergency arrangement.
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The Japanese government and central bank launched a joint assault Thursday on the persistently strong yen as volatility in the currency market casts a shadow over the nation's economic outlook, with struggling exporters calling for action by the authorities.
The Finance Ministry and the Bank of Japan intervened in the foreign exchange market, apparently selling a huge amount of yen to purchase the U.S. dollar, the first such move by the country since March. The BOJ for its part decided on additional monetary easing to underpin the economy, expanding its 40 trillion yen asset purchase program to 50 trillion yen.
The coordinated action came as the yen appreciated near its postwar high against the dollar, hurting the profitability of major industries such as carmakers and high-tech firms despite the economy showing some signs of an upturn following the serious slowdown triggered by the March 11 earthquake and tsunami.
The currency intervention pushed the dollar above the 79 yen line from the lower 77 yen range.
''The yen's one-sided strength recently in the foreign exchange market has persisted,'' Finance Minister Yoshihiko Noda told reporters. ''If the trend remains, it would cause negative effects on the stability of the Japanese economy and finance, despite various efforts having been made for the reconstruction of Japan following the earthquake disaster.''
BOJ Governor Masaaki Shirakawa said separately that the bank and the government are in agreement regarding the negative aspects of a stronger yen. ''We are in an environment in which we need to be more careful about downside risks to the economy,'' Shirakawa told a press conference after a policy meeting.
Expanding the program, with which the BOJ eases credit conditions in Japan by purchasing financial assets such as government bonds and corporate debt, was necessary to ''show our policy stance'' against those risks, he said.
The BOJ acts as an agent when the Finance Ministry decides to intervene.
Noda did not clarify the amount of yen sold in the attempt to influence exchange rates or which currency had been purchased. The ministry is expected to release detailed information later this month.
It was the first intervention by Tokyo since March 18, when the monetary authorities of the Group of Seven leading economies -- including Japan, the United States and some European countries -- jointly stepped into the market to stem the yen's surge after it hit a postwar high of 76.25 against the dollar the previous day.
A unilateral intervention by Japan was last conducted in September.
Noda said Japan had consulted with the monetary authorities of some other countries before the latest intervention, but did not say whether Tokyo was able to secure their support.
The intervention was Japan's ''response against speculative and disorderly movements'' in the market, the finance minister said.
Chief Cabinet Secretary Yukio Edano, the government's top spokesman, said at a press conference that Tokyo stepped into the market at an ''appropriate time.''
Also Thursday, the BOJ additionally eased its monetary policy, expanding its 40 trillion yen asset purchase program to 50 trillion yen amid growing pressure from the government to cooperate in grappling with the yen's strength to spur the economy.
Its nine-member Policy Board voted unanimously for the decision at a one-day meeting, in which it also kept the key short-term interest rate at around zero to 0.1 percent.
''Japan's economic activity is picking up with an easing of the supply-side constraints caused by the earthquake disaster,'' the BOJ said in a statement, while warning that volatility in the currency and other financial markets could ''negatively affect corporate sentiment and economic activities in Japan.''
The policy meeting, originally scheduled for Thursday and Friday, was shortened to one day in an emergency arrangement.
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