Japanese Finance Minister Yoshihiko Noda today repeated his warning to markets against pushing the yen up too far, saying he was watching currency moves carefully.
The Bank of Japan is also becoming increasingly alarmed about the potential damage the yen’s recent rises could have on business sentiment and the fragile economy. Japanese authorities have issued a series of verbal warnings to slow yen rises, fearing that they would hurt the export-reliant economy.
Chief Cabinet Secretary Yukio Edano said the government needed to closely watch currency moves because they have an important effect on the economy.
BOJ Deputy Governor Hirohide Yamaguchi said this week that the central bank would act flexibly and decisively with an eye on how rises in the yen could affect the economy, signalling readiness to ease monetary policy further if the recovery comes under threat.
The BOJ will hold its next rate review on Aug. 4-5.
The dollar fell in the Asian trading session to a four-month low of 78.21 yen, the lowest since joint G7 intervention in mid-March, as easing fears over the euro zone’s debt crisis shifted the market’s focus to chaotic efforts among Washington lawmakers to avoid default with the approach of a deadline for raising the U.S. debt ceiling.
Dollar recovered some if its losses later in Asia to 78.72 yen.