Japan intervenes to weaken surging currency

By David Watkins , AFP

TOKYO–Japan on Monday intervened in currency markets for the first time since August to weaken the yen, the government said, after the unit hit a fresh post-war high against the greenback. Finance Minister Jun Azumi told reporters that Japan’s action was unilateral and did not comment on the size of the intervention. Japan’s Nikkei index rose by more than 0.50 percent in the wake of the move. Initial gains were quickly weighed by profit-taking and as Japanese exporters looked to repatriate overseas earnings at Monday’s quickly improved rates ahead of monthly book closing, said dealers. “Although I had repeatedly said we will take decisive measures against speculative moves in markets, those moves unfortunately continued so I ordered intervention at 0125 GMT,” Azumi told reporters at a quickly convened news conference.

“It was solo intervention this time,” Azumi added. Japanese officials have in recent weeks stepped up intervention rhetoric in an attempt to verbally weaken the unit, but it continued to strengthen regardless. Officials had hoped that last week’s EU agreement on measures to shore up the eurozone and help resolve the bloc’s debt crisis would boost confidence and have an easing effect on fund flows into the Japanese unit. Concerns are growing in Japan that the strong currency, which erodes the repatriated profits of exporters and makes exports less competitive, could undermine a fragile recovery from the March 11 earthquake and tsunami. Japan’s manufacturers have staged a rebound since the March disasters that left around 20,000 dead or missing and shattered crucial supply chains, heavily disrupting Japanese industry.