Japan Won’t Intervene Unless Speculation Increases, Panel Says

Japanese officials won’t intervene further in the currency market unless they see evidence of speculative buying strengthening the yen, according to Naomi Fink, head of Japan strategy at Jefferies Japan Ltd.

Japan’s Ministry of Finance and the Bank of Japan won’t repeat their tactic of selling yen in an effort to weaken the currency, as they did in March following the nation’s worst earthquake, unless it becomes clear that market activity is being driven by speculators instead of institutional investment, Fink said during Bloomberg Link’s Japan Conference in New York.

“The interventions seem to be targeted specifically to when speculative activity is dominating the market, not at specific levels,” Fink said.

The yen dipped below 80 versus the dollar yesterday, increasing speculation the Bank of Japan would intervene, as it did March 18 in conjunction with other Group of Seven nations. The yen surged following the earthquake, reaching a post-World War II high of 76.25 March 17, amid speculation Japanese investors would repatriate assets to pay for reconstruction.

Japan won’t intervene unless there is another large shock, according to Hugh Patrick, director of the Center on Japanese Economy and Business at the Columbia Business School. Patrick also spoke at the Japan Conference.

The yen will remain more attractive than the dollar as the U.S. utilizes policies that equate to the monetization of the nation’s debt, Milton Ezrati, senior economic strategist at Lord Abbett & Co., said at the event.

He also said Europe’s debt crisis makes the yen attractive versus the euro.

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