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Japan Signals Increased Concern About ‘One-Sided’ Yen Gains

Japan Signals Increased Concern About Gains in Yen
A file photo shows Jun Azumi, Japan's finance minister, attends a plenary session at the lower house of the Diet in Tokyo. "It's obvious that recent one-sided moves in the yen fail to reflect the real state of the Japanese economy," Azumi said at a press conference in Tokyo today. Photographer: Haruyoshi Yamaguchi/Bloomberg

Japanese Finance Minister Jun Azumi indicated increased concern about the yen’s advance, reiterating his resolve to take action against abrupt and speculative movements in foreign-exchange markets.

“It’s obvious that recent one-sided moves in the yen fail to reflect the real state of the Japanese economy,” Azumi said at a press conference in Tokyo today. “We won’t rule out any possible options to counter excessive moves” he said, adding that he is “ready to act decisively if needed.”

The yen touched its strongest level against the euro in 11 years this week and has also gained against the dollar, threatening the profits of exporters just as Europe’s debt crisis weakens demand. Sharp Corp., the nation’s biggest maker of liquid-crystal displays, fell to its lowest since 1975 today after the Nikkei newspaper reported the company will probably post a quarterly loss and plans to cut jobs.

“Japanese authorities are increasing alarm on the yen’s gains by stepping up their rhetoric,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo and a former central bank official. “Yet, if Japan were to intervene unilaterally when the turmoil in Europe is deepening day by day, it’s just like a drop in the ocean.

The yen traded at 78.25 per dollar at 1:42 p.m. local time and 94.88 against the euro. Japan’s currency has appreciated more than 5 percent against the dollar since mid-March.

Verbal Intervention

The government’s ‘‘verbal intervention” may help to limit excessive yen buying because investors will anticipate stronger steps to come, said Tomoko Fujii, a senior foreign-exchange strategist at Bank of America Merrill Lynch in Tokyo.

The Nikkei 225 Stock Average fell 0.1 percent as of 1:42 p.m. local time.

The government is considering extending a 10-trillion yen ($130 billion) lending program beyond its expiration on Sept. 30 to help companies take advantage of a stronger currency by pursuing mergers and acquisitions abroad, according to two government officials. The officials, who spoke on condition of anonymity because the discussions haven’t been made public, didn’t elaborate on how long the program may be extended.

The facility has helped finance 15 projects worth $8.9 billion, according to the state-run Japan Bank for International Cooperation. JBIC Governor Hiroshi Okuda, who’s also a former chairman of Toyota Motor Corp., this month said Japanese businesses are calling for an extension of the program.

In a separate move today, the government appointed economists Takehiro Sato and Takahide Kiuchi to the Bank of Japan policy board, the central bank said. The two analysts, who have previously signaled support for monetary stimulus, will hold a press conference at 5 p.m. in Tokyo today.

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