BLBG: Yen Climbs as Japan Reiterates Opposition to Intervention
By Anchalee Worrachate and Yasuhiko Seki
Sept. 25 (Bloomberg) -- The yen strengthened beyond 90 versus the dollar for the first time since February as Japan’s Finance Minister Hirohisa Fujii reiterated his opposition to intervention in foreign-exchange markets.
Japan’s currency rose against all of the 16 most-traded counterparts tracked by Bloomberg on Fujii’s comments yesterday at the Group of 20 meeting in Pittsburgh. The dollar dropped for the first time in three days versus the euro, and the pound dipped below $1.60 for the first time since June.
“There remains a strong view that Japan now favors a strong currency in sharp contrast to the view of the previous Liberal Democratic Party-led government desiring a weak yen,” wrote Derek Halpenny, European head of global currency research in London at Bank of Tokyo-Mitsubishi Ltd., in a research note today.
The yen climbed as much as 1.4 percent to 89.97 versus the dollar, the strongest level since Feb. 12, before trading at 90.10 at 7:14 a.m. in New York, compared with 91.27 yesterday. It extended its weekly gain to 1.1 percent. Japan’s currency gained 1 percent to 132.57 per euro, from 133.86. The dollar slid 0.1 percent to $1.4687 per euro, from $1.4666.
Fujii, whose Democratic Party of Japan took office for the first time this month, referred to a previous G-20 pledge to refrain from pursuing a currency-devaluation strategy. That agreement applies not only to the yen, Fujii told reporters in Pittsburgh after meeting with U.S. Treasury Secretary Timothy Geithner.
Shift in Japan
The Japanese finance minister’s comments yesterday underscore a shift in tone from the previous Liberal Democratic Party, which was perceived to favor a weaker currency as a boost to exports. While LDP-led governments didn’t sell the yen in the past five years, they had a history of foreign-exchange intervention combined with support for the “strong-dollar” policy of the U.S.
“I don’t intend to take strong yen policy but, at the same time, a deliberate weaker-currency policy was denounced” at the G-20 summit in London earlier this year, Fujii said. “In principle, markets -- the currency market, the stock market -- are the stronghold of a free economy. I have been questioning the idea of easy intervention.”
Japan’s currency jumped last week after Fujii, whose party won elections promising to boost households’ purchasing power, said he didn’t support a “weak yen.” A stronger currency can reduce the cost of imported goods for consumers.
