Japan intervenes in currency market to weaken yen
An employee of a foreign exchange dealing room in Tokyo looks at a screen displaying the U.S. dollar is traded at 77,30 yen Monday, Oct. 31, 2011 shortly after Japanese monetary authorities intervened in the currency market to weaken the yen. The dollar has jumped against the yen following the intervention. Monday's action, confirmed by Finance Minister Jun Azumi, came after the Japanese currency had surged to a post-World War II high of 75.32 yen against the dollar earlier Monday. (AP Photo/Koji Sasahara)
TOKYO >> The dollar jumped about 5 percent against the yen Monday after Japan intervened to weaken its currency, whose appreciation has threatened the country’s tentative recovery from the tsunami disaster.
The dollar shot above 79 yen in late morning trading in Tokyo after earlier touching a post-World War II low of 75.32 yen — a level that was battering Japan’s vital exporters.
Finance Minister Jun Azumi said Japan was compelled to act because of the persistent "one-sided and speculative movement" in the yen’s exchange rate, confirming he gave orders to sell yen and buy dollars at 10:25 a.m. local time.
"Whatever the market thinks, I will continue intervening thoroughly until I am satisfied," Azumi said. He declined to say the amount of yen the Japanese government had spent in the action.
The Japanese currency has steadily climbed this year because it has been viewed as a safe haven amid the European debt crisis. Its rise has been another blow to manufacturers as they struggle to recover from the March 11 tsunami, which damaged parts makers in the northern area of Tohoku. Recent floods in Thailand, where many Japanese exporters have set up factories, have also disrupted manufacturing.
In mid afternoon trading in Tokyo, the dollar was trading at 79.41 yen, but it remains to be seen how long an impact the intervention will have. The euro also got a boost, rising to nearly 110.85 yen from 107.15 yen earlier in the day.
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Japan last intervened in August, but the effect was short-lived as traders continued to bid up the yen.
The intervention comes ahead of the Group of 20 summit in Cannes, France, on Thursday and Friday.
A strong yen erodes the overseas income of Japan’s exporters such as Nintendo Co. and Toyota Motor Corp.
Game maker Nintendo, which gets nearly 80 percent of its sales outside Japan, said last week that exchange rate losses totaled 52.4 billion yen ($689 million) during the half-year through September, and projected a net loss for the full year, partly because of the yen’s appreciation.
Yuji Kameoka, director of the investment Information department at Daiwa Securities, predicted the intervention would be effective in keeping the dollar somewhere between 78 and 79 yen "for awhile."
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Associated Press Writer Noriko Kitano contributed to this report.
