[QODLink]
Business
Japan intervenes to weaken yen
In a bid to strengthen its economy, the government intervenes in the currency markets to weaken the yen.
Last Modified: 04 Aug 2011 09:40
A strong yen is painful for Japan because it reduces the value of foreign earnings for big companies  [EPA]

The Japanese government has stepped in to weaken its currency in an attempt to boost economic growth, intervening in global currency for the first time in six years.

Japan unleashed waves of yen selling on Thursday that spread from Tokyo through New York trading.

The sales, conducted alone without help from its Group of Seven partners, are expected to continue in the days ahead.

The yen has been growing in strength because of the debt problems in the United States and Europe that had hampered the country's recovery from March's earthquake and tsunami, and harmed exports.

Yoshihiko Noda, Japan's finance minister, said Thursday's intervention was taken because the strong yen could hurt the economy and slow Japan's efforts to recover from its March 11 disaster.

"If the moves continue, it could negatively impact the Japanese economy and financial stability when Japan is making various efforts to reconstruct itself from the impact of the disaster," Noda said.

"Therefore we carried out currency intervention. Now we will watch market movements closely."

Noda said he expected the Bank of Japan to take appropriate action. He declined to comment on the size of the intervention or say what currencies Japan bought.

The intervention pushed the yen down to about 79 yen to the dollar from a level of about 77 yen.

The yen has surged nearly five per cent in the past month and, on Monday, came close to a record high against the dollar.

'Limited impact'

Many analysts said that with the US and euro zone economic and fiscal woes unresolved, the impact of Tokyo's solo intervention may be limited.

Japan's central bank announced further monetary easing.

The Bank of Japan said its asset buying programme would be expanded to 15tn yen, an increase of 5tn.

The Japanese Nikkei average came off five-week lows on Thursday after the currency devaluation.

The benchmark Nikkei rose 0.2 per cent to 9,659.18, while the broader Topix shed 0.1 per cent to 826.36.

"The stock market is not very appreciative of today's easing and intervention," Ryoji Musha, president of Musha Research, said.

However, exporters gained in heavy trade, with auto giant Toyota Motor rising 0.6 per cent to 3,140 yen, and Tokyo Electron , the world's No 2 supplier of chip-making equipment, adding 1.7 per cent to 3,955 yen.

A strong yen is painful for Japan because it reduces the value of foreign earnings for companies such as Toyota Motor Corp, Nintendo Co, and makes Japanese goods more expensive in overseas markets.

Source:
Agencies
Topics in this article
People
Country
Organisation
Featured on Al Jazeera
As Western stars re-release 1980s charity hit, many Africans say it's a demeaning relic that can do more harm than good.
At least 25 tax collectors have been killed since 2012 in Mogadishu, a city awash in weapons and abject poverty.
Tokyo government claims its homeless population has hit a record low, but analysts - and the homeless - beg to differ.
3D printers can cheaply construct homes and could soon be deployed to help victims of catastrophe rebuild their lives.
Featured
Pro-Russia leaders' election in Ukraine's east shows bloody conflict is far from a peaceful resolution.
Critics challenge Canberra's move to refuse visas for West Africans in Ebola-besieged countries.
A key issue for Hispanics is the estimated 11.3 million immigrants in the US without papers who face deportation.
In 1970, only two mosques existed in the country, but now more than 200 offer sanctuary to Japan's Muslims.
Hundreds of the country's reporters eke out a living by finding news - then burying it for a price.