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Japan Finance Chief Backtracks on Yen Remarks

Friday, 08 Jan 2010 06:39 AM

Japan's new finance minister, Naoto Kan, said that currency levels should be determined by markets, backtracking from his earlier call for a weaker yen after an apparent rebuke from the prime minister.

But Kan also said the government should pay heed to the views of the country's business community, signaling that he was sticking to the view of favoring a weak yen as it boosts the competitiveness of Japanese exports.

"Currencies undoubtedly should be determined by markets," Kan told a news conference.

"But I also believe that generally speaking, it's the finance minister's job to act against currency moves when needed."

The dollar dipped against the yen after Kan said markets should decide currency rates, but then climbed back up when he reminded markets he had the authority to intervene in markets.

The dollar struck the day's low of 93.13 yen, falling from around 93.30 yen before Kan's remarks. The dollar then climbed back to 93.32 yen, little changed from late U.S. trade, after Kan said it was a finance minister's job to respond to currency moves.

Kan jolted markets in his first public appearance since appointed as finance minister, saying on Thursday that he hoped the yen would weaken further and that he would work with the Bank of Japan to achieve an appropriate exchange rate level.

That remark prompted a sharp slide in the currency against the dollar and a rebuke from Prime Minister Yukio Hatoyama, who said on Friday that the government should not comment on foreign exchange rates.

When asked about Kan's remarks, Hatoyama said: "I think he was talking in terms of how the business community felt."

Kan, 63, formerly National Strategy Minister, was named finance minister on Wednesday, replacing 77-year-old Hirohisa Fujii, who stepped down for health reasons.

He said on Thursday that many Japanese firms were in favor of having the dollar/yen exchange rate around 95 yen, higher than the pair traded in late 2009.

It is extremely rare for a finance minister, who has jurisdiction over currency policy, to refer to specific exchange rate levels.

Hatoyama's government has suffered since taking office in September from a lack of clarity on who sets policies and a perception that ministers are speaking out of turn.

Japan's key exports industry is slowly helping the world's second-largest economy emerge from its worst post-war recession, so a weaker yen would help.

Major exporters, including Honda Motor, have complained about the high level of the yen.

© 2017 Thomson/Reuters. All rights reserved.

 
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Japan's new finance minister, Naoto Kan, said that currency levels should be determined by markets, backtracking from his earlier call for a weaker yen after an apparent rebuke from the prime minister. But Kan also said the government should pay heed to the views of the...
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2010-39-08
Friday, 08 Jan 2010 06:39 AM
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