TOKYO — Both the euro and U.S. dollar held firm against the yen in Asian trade Tuesday despite continuing worries over European debt woes and the failure of U.S. lawmakers to agree on a deficit-busting plan. The euro traded at 103.87 yen in Tokyo trade, edging up from 103.83 yen late Monday in New York. The single currency stood at US$1.3480 compared to US$1.3494. The dollar also firmed to 77.06 yen in Tokyo trade from 76.94 yen. “There are still some stop-loss orders that aren’t executed yet, so the pair (dollar/yen) may rise a bit more,” one trader said. Nobuyoshi Kuroiwa, deputy general manager of the forex team at Hachijuni Bank, said the move was also in part a sensitive reaction to mixed reports about remarks made by Finance Minister Jun Azumi. Azumi during a parliamentary panel dismissed an idea that Japan could buy large amounts of foreign bonds as a form of intervention.
The proposal, floated by former Bank of Japan official Kazumasa Iwata, is that the government should establish a yen-denominated fund worth 50 trillion yen to buy overseas securities. This would necessarily involve selling the yen. Azumi said “there is a high possibility (such foreign-bond buying) would be tantamount to currency-market intervention,” and that the idea of foreign bond purchases “doesn’t fit well with our thinking,” since the purpose of intervention is to counter disorderly market moves.