Japan’s Azumi Distances Himself From Yen Intervention Remark

Japan's Finance Minister Jun Azumi
Jun Azumi, Japan's finance minister. Photographer: Kiyoshi Ota/Bloomberg

Japanese Finance Minister Jun Azumi distanced himself from his comments to lawmakers that indicated a level that triggered intervention in the yen in October.

“I instructed an intervention when the yen was 75.63, which could pose a threat to the Japanese economy, and finished when it was 78.20,” Azumi said in the parliament in Tokyo today. He didn’t mean that the level prompted intervention, and was referring instead to the yen’s closing price before the Oct. 31 sales, he later told reporters.

Economists and investors are focused on the possibility of more attempts to weaken Japan’s currency as the government seeks to sustain growth amid faltering export demand. Weaker exports probably caused the economy to contract in the fourth quarter, according to the median estimate in a Bloomberg News survey before a report due Feb. 13.

“He was a bit careless,” said Junko Nishioka, chief Japan economist in Tokyo at RBS Securities Japan Ltd. and a former Bank of Japan official, “It’s questionable that a finance minister who’s in charge of currencies comments about a certain level of the yen.”

A finance ministry official, speaking to Bloomberg News on condition of anonymity because of the ministry’s policy, later said that the ministry doesn’t have any specific level as a trigger for intervention and that Azumi intended to refer to the yen’s level the day before his action.

Yen Prices

At the time Azumi spoke, the number 75.63 was visible on a board displayed by an opposition lawmaker, with the date Oct. 30, a Sunday. The intervention was carried out on Oct. 31. The currency’s closing price on Oct. 28, the last day of trading before the move, was 75.82. The opening price Oct. 31 was 75.61.

The finance chief also said his nation’s authorities have no reservations about conducting intervention alone to combat currency swings. Gains in the yen are deepening an export slump that is threatening profits at companies from Sharp Corp. to Honda Motor Co. and limiting the recovery from last year’s earthquake.

“We’ve said we won’t hesitate to intervene” to counter speculative currency movements, Azumi told lawmakers. “We won’t be shy at all about unilateral intervention.”

The U.S. Treasury Department criticized Japan in a December report for unilaterally selling its currency in August and October, saying the Asian nation should focus on steps to “increase the dynamism of the domestic economy.”

Stealth Interventions

Japan’s currency traded at 77.65 as of 3:25 p.m. in Tokyo, compared with a post-World War II high of 75.35 on Oct. 31. The Finance Ministry this week said it conducted unannounced interventions in November as part of 14.3 trillion yen ($184 billion) of sales in 2011.

GDP shrank 1.4 percent in the three months ended Dec. 31 after expanding at an annualized 5.6 percent rate in the previous quarter, according to the median forecast of 25 economists surveyed by Bloomberg News.

The government said this week exports in the first 20 days of January fell about 20 percent from the previous year, the fastest decline since the same period in December 2001.

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