Japan’s finance minister warned he’s ready to intervene in the currency market again to stem a yen advance that risks slowing the nation’s recovery.
“An unstable situation is continuing,” Yoshihiko Noda, 54, said during a talk show Sunday on public television broadcaster NHK. “As foreign exchange market matters are my prerogative, I will continue to closely watch the markets and take bold action if it becomes necessary.”
The yen has risen above the level that prompted Japan to sell the currency on Aug. 4 for the first time since March. Noda, who signaled he won’t rule out a bid for the nation’s leadership when Prime Minister Naoto Kan steps down, said the drawbacks of a strong currency outweigh its benefits at a time when the nation is getting over a record earthquake in March.
Japan’s currency climbed to 76.31 per dollar on Aug. 11, close to its post-World War II high of 76.25 reached March 17, as the U.S. debt downgrade and the European sovereign debt crisis increased its demand as a haven. The yen strengthened to 76.97 on Aug. 4 before Japan entered the market to sell the currency that day.
The yen’s jump of about 8.6 percent against the dollar in the past six months threatens to crimp the overseas earnings of exporters such as Toyota Motor Corp. and Sony Corp.
Toyota, the nation’s biggest carmaker, has said that every one yen gain against the dollar cuts operating profit by 34 billion yen according to its current full-year outlook, which is based on 80 yen to the dollar. Nissan Motor Co. and Honda Motor Co. also expected the same exchange rate.
Noda said the strong yen has benefits including making it cheaper for companies to make overseas acquisitions. “Still, there are more negative sides at this time, when Japan is trying to recover from the disaster,” he said.
A magnitude-9 temblor and tsunami devastated Japan’s northeast coast on March 11, leaving about 20,000 people dead or missing, causing an estimated 16.9 trillion yen ($220 billion) in damage and triggering the world’s worst nuclear accident since Chernobyl.
Japan’s economy probably shrank at a 2.5 percent annual pace in the three months through June, the third straight quarter of contraction, according to the median estimate of 25 economists in a Bloomberg News survey. The government will release the report at 8:50 a.m. Monday in Tokyo.
Noda also said while he isn’t ready to declare whether he will run for the presidency of the ruling Democratic Party of Japan to replace Kan, he’s prepared to lead “when the time is right.”
The finance minister said Saturday that a “nation-saving” coalition should be created with opposition parties such as the Liberal Democratic Party and the New Komeito to ensure the smooth implementation of disaster-relief measures.
“We would need to bow and knock on the doors of opposition party politicians to ask for help,” Noda said on a TV Tokyo program.
Kan has said he will resign after parliament approves earthquake recovery legislation, a bond-funding bill for this year’s budget and renewable energy legislation.
The DPJ may hold its leadership election Aug. 28, the Nikkei newspaper reported Aug. 10, citing party officials it didn’t name. The new leader would likely become prime minister, because of the party’s strength in parliament.
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