Senior finance ministry and Bank of Japan officials discussed the yen on Thursday in a sign that Tokyo does not want currency traders to drop their guard against additional intervention to slow its gains. The BoJ could ease monetary policy further depending on the US Federal Reserve's stance, Japanese Finance Minister Yoshihiko Noda said in a speech, acknowledging that US monetary policy could push the yen higher versus the dollar.
Takehiko Nakao, Japan's currency tsar and the No 2 bureaucrat at the Ministry of Finance, said he met his central bank counterpart, Hiroshi Nakaso, at the BoJ's headquarters on Thursday, where they also talked about sovereign woes in Europe and the United States. A similar meeting last year was a prelude to Japan's first currency intervention in six years. This time, currency traders doubted that intervention was imminent, partly because of the dollar's broad weak trend.
Japan's government should guarantee funding for some companies hit by the strong yen as part of an economic stimulus package, Noda said. Japan has taken similar steps before, and some traders warn this would do little to slow yen appreciation over the long run. "I won't comment on currency intervention," Nakao told reporters after the meeting. "I won't comment whether we discussed measures to cope with the yen's rise. We met today because we wanted to facilitate mutual communications given the current market situation."
Nakao said he held the meeting before he travels to meet officials in other Asian countries. Given that ministry and central bank officials exchange information regularly over the phone, the face-to-face meeting was largely symbolic, aimed at sending markets a message that the government has not let its guard down against sharp yen rises, and stood ready to act if necessary.
Both institutions said monetary policy was not discussed at the meeting. When Japan intervened earlier this month, the central bank also decided to ease its monetary policy in an attempt to amplify the impact. "At the meeting, the two exchanged views on currency market moves," a central bank spokesman said. "They did not discuss monetary policy at the meeting."
BoJ's Nakaso later told Reuters that he agreed with Nakao that the two agencies should stay on alert on currency moves "24 hours" and carefully watch markets. The finance ministry's Nakao also told reporters after the meeting that he did not think it was appropriate for traders to treat the yen as a safe haven given the economy was just emerging from a recession caused by the devastating earthquake, tsunami and nuclear disaster in March.
Japan sold its currency and eased monetary policy on August 4, but the moves have offered little respite to exporters as the yen remains near an all-time high of 76.25 to the dollar. Noda reiterated that Japan stands ready to intervene again and spoke emphatically about the damage a strong yen could do. "When the dollar went to 76 yen shortly after the earthquake in March, this was like another tsunami crashing against our economy," Noda said.
Comments
Comments are closed.