Tags: yen | currency | currencies | exchange | Sakakibara

Sakakibara: Yen Will Soar on US Economic Worries

By Doug Hulette   |   Sunday, 15 Aug 2010 03:49 PM

The yen, which has climbed 7.9 percent against the dollar this year, may continue to strengthen amid worries about the health of the U.S. economy, according to a high-profile former currency official in Japan.

“What we are seeing is not appreciation of the yen but weakness of the dollar, reflecting concerns that the U.S. economy may falter,” Eisuke Sakakibara said Saturday on the Fuji television network, according to Bloomberg. “There is a chance the yen will reach an all-time high and stay at that level for the time being.”

“Japanese companies will feel the pinch of a stronger yen and a weakness in share prices around the end of this year,” Sakakibara said.

The yen reached 84.73 to the dollar on Aug. 11; the currency’s peak of 79.75 was set in April 1995, Bloomberg said. Sakakibara earned the nickname “Mr. Yen” during his time at Japan’s Finance Ministry in the late 1990s.

Meanwhile, Reuters cited the Japanese news agency Jiji as saying that Prime Minister Naoto Kan said he would continue to watch the yen carefully.

Kan said it is yet to be decided how and when he would meet with Bank of Japan Governor Masaaki Shirakawa to discuss the recent surge by the yen, but that he would like to communicate as necessary, Jiji reported.

Kan’s comments came amid speculation the prime minister and the central bank governor may meet as early as this week to discuss the yen’s strength and possible responses, although likely options are seen as limited.

The yen weakened late last week on the prospect that Japanese officials will increase verbal intervention to try to stem yen gains.

But traders said the yen was likely to gain longer term, because the Group of Seven countries are unlikely to agree to joint foreign exchange market intervention to strengthen their currencies as their own economies are not recovering strongly.

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The yen, which has climbed 7.9 percent against the dollar this year, may continue to strengthen amid worries about the health of the U.S. economy, according to a high-profile former currency official in Japan. What we are seeing is not appreciation of the yen but weakness...
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