TOKYO: The yen extended its advance Monday despite repeated efforts to talk down the safe-haven currency, as concerns over the impact on exporters weighed on the stock market.
The Japanese currency has soared to 17-month highs in the past week as worries about the global economy sent dealers rushing in, while the prospect of US interest rates remaining low also drove a shift from the dollar.
A strong currency is damaging for Japan's exporting giants, such as Toyota and Sony, as it makes their goods more expensive overseas and shrinks the value of repatriated profits.
In afternoon trade in Japan the dollar slipped to 107.90 yen from 108.10 yen in New York on Friday.
The euro fetched $1.1409 and 123.11 yen against $1.1398 and 123.21 in New York late Friday.
"Players are turning pessimistic as the stock market is weak, and the yen's strengthening will likely continue for a while," said Marito Ueda, senior dealer at FX Prime.
On the Tokyo Stock Exchange, the benchmark Nikkei-225 index lost 0.44 percent, or 70.39 points, to 15,751.13.
Japanese authorities have warned since last week against the yen's advance, with Finance Minister Taro Aso saying rapid gains were undesirable, although Prime Minister Shinzo Abe pledged to avoid "arbitrary" intervention.
Top government spokesman Yoshihide Suga on Monday said the forex market "is showing one-sided, speculative movements," and that the government was watching closely and "ready to take necessary measures depending on the situation."
Speculation about a rare intervention, which would be generate allegations of currency manipulation, have risen as the Bank of Japan's efforts to weaken the currency appear to have run out of steam.
However, Ueda said the government can do little more than try to talk the yen down, particularly as it prepares to host a Group of Seven summit where such a controversial move would prove a major distraction.
"Real intervention is impossible ahead of the G7 summit in May" in Japan, Ueda said.
"The more they try to talk it down, the more their efforts backfire as we don't think they can really intervene in the market."
The greenback was easier against most other emerging market currencies, slipping 0.29 percent against the Malaysian ringgit and down 0.29 percent against the Indian rupee.
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