DPJ Members Urge Kan to Intervene in Currency Market to Stem Yen's Surge
Naoto Kan, Japan's prime minister
Haruyoshi Yamaguchi/Bloomberg
Naoto Kan, Japan's prime minister, pauses during a plenary session of the lower house of the Diet in Tokyo.
Naoto Kan, Japan's prime minister, pauses during a plenary session of the lower house of the Diet in Tokyo. Photographer: Haruyoshi Yamaguchi/Bloomberg
Lawmakers from Japan’s ruling party urged Prime Minister Naoto Kan to consider intervening in the currency market for the first time since 2004 to arrest the yen’s rally to a 15-year high.
A group of Democratic Party of Japan legislators, who call themselves the “anti-deflation lawmakers,” made the demand in a statement today, Yoichi Kaneko, one of its members, said on his website. They called on the Bank of Japan to “engage in large-scale monetary easing.”
“We can only say that our nation’s authorities have failed to react with the sense of crisis” of their American counterparts, the group said in its statement, referring to the U.S. Federal Reserve’s move this week to purchase Treasuries to support its cooling expansion. “While the government has shown some willingness to combat the stronger yen, we hope they will step up the nature of their comments and actions.”
DPJ lawmakers, whose party faced an election defeat in July’s mid-term polls, are calling for action as the yen’s rally coincides with the slower economic expansion. They criticized Bank of Japan Governor Masaaki Shirakawa’s decision to refrain from making policy more accommodative at a policy board meeting this week.
“On top of failing to unveil specific measures at a monetary policy board meeting this week, some BOJ officials even made statements that could be interpreted as underestimating the economic crisis we are in,” the members said.
Assessment Unchanged
The statement didn’t elaborate. The central bank on Aug. 10 kept its assessment of the economy unchanged and reiterated that the nation will continue to expand.
The group’s previous proposals include pushing the central bank to buy government bonds and set an inflation target of 2 percent to 3 percent.
The yen strengthened to 84.73 against the dollar on Aug. 11, the highest since July 5, 1995. It has retreated since Finance Minister Yoshihiko Noda and central bank Governor Masaaki Shirakawa said yesterday they are closely watching the currency, comments investors say indicate preparedness to curb the yen’s gains to protect the nation’s economic recovery.
More than a third of Japan’s margin traders think policy makers will intervene to weaken the yen if it strengthens past the 15-year high reached this week, a survey by Gaitame.com Research Institute Ltd. showed.
Intervention
A poll by the unit of Japan’s largest foreign-exchange margin dealer showed that 34.6 percent of respondents expect yen-selling operations if the currency gains to between 80 and 85 per dollar. Another 30.9 percent predicted such a move for a range of 75 and 80 per dollar and 7.1 percent expect intervention at beyond 75 per dollar.
Japan’s economy probably grew at the slowest pace in three quarters in the period ended June 30, economists surveyed by Bloomberg News forecast a government report will show on Aug. 16.
The DPJ group, led by Jin Matsubara, numbers more than 150 of the 413 DPJ members of the two houses of parliament.
To contact the reporter on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net; Lily Nonomiya at lnonomiya@bloomberg.net
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