Japan finance's chief said the government will "respond appropriately" to a surge in the yen after it hit a 15-year-high against the dollar amid a weakening U.S. economic recovery.
"We are closely monitoring a rapid rise in the yen," Finance Minister Yoshihiko Noda told reporters Thursday. His comments came a day after the dollar fell to 84.71 yen, the lowest since 1995.
The dollar climbed back to 85.70 in late Tokyo trade Thursday. Noda declined to comment on currency interventions by the government to prop up the greenback.
A foreign exchange dealer in Tokyo said there were rumors about the Bank of Japan buying dollars but it was unlikely that Japanese authorities have taken such steps. The BOJ hasn't intervened in the currency market since March 2004.
The yen's recent rise against the dollar has punished shares of Japanese exporters like Sony Corp. as it makes their products less competitive in overseas markets. It can also reduce the value of profits made overseas when they are returned to Japan.
The central bank also issued a statement from its governor, saying the central bank will closely monitor the effects of recent currency moves on the nation's economy.
Governor Masaaki Shirakawa said that there are "substantial fluctuations" in currency and stock markets amid "growing uncertainty about the outlook for the U.S. economy."
Investors stepped up selling of dollars worldwide after the Federal Reserve on Tuesday gave a gloomy economic outlook and announced additional monetary easing measures to support the U.S. economic recovery.
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