Japan’s banking lobby said continued yen appreciation will adversely affect the economy, as the currency hovered close to a four-month high against the dollar.
“The strong yen has been the chronic issue that affects Japanese businesses the most,” Katsunori Nagayasu, head of the Japanese Bankers Association, told reporters today in Tokyo.
Nagayasu said the currency’s gains stem from the European sovereign debt crisis and the risk of a third round of quantitative easing by the U.S. Federal Reserve. The yen traded at 79.07 per dollar at 5:16 p.m. in Tokyo, after reaching 78.47, the highest since March 17.
Japan is beginning to recover from a record earthquake in March, with industrial production rebounding and companies stepping up capital spending plans. A stronger yen can erode exporters’ profits and make Japanese goods more expensive abroad.
Nagayasu, who is also chief executive officer of Mitsubishi UFJ Financial Group Inc., said the European crisis is unlikely to have a direct effect on Japanese lenders because their holdings of assets from the region are limited.
“But it’s having an indirect impact because it’s one of the reasons behind the yen’s gains,” he said.