Japan intervenes in currency market to cap yen gains
( 2001-09-17 14:38) (7)
Japan said it had intervened in the currency market Monday to cap recent yen gains against the dollar, which threatened the already fragile economy.
"Recent sharp appreciation of the yen in the exchange markets could have undesirable implications for the recovery of Japan's economy," Finance Minister Masajuro Shiokawa said in a statement.
"In this context, we have taken appropriate actions today in the exchange market.
"We will continue to closely monitor the market and take appropriate action as necessary for the stability of exchange rates."
The impact on foreign exchange trade in Tokyo was minimal as the size of the intervention was limited, said dealers.
"Intervention came through a couple of banks," said Taketo Uda, foreign exchange manager at HSBC in Tokyo.
"The yen hit 116 and then they came in," he said.
The Ministry of Finance bought the dollar and sold the yen to stem the gains in the Japanese currency.
Speculation was high there would be further interventions if the dollar again slipped below 117 yen, dealers said.
The dollar has dropped sharply against the Japanese unit following the unprecedented terrorist attacks in the United States last Tuesday.
At 12.45 pm (0345 GMT), the dollar was at 117.73 yen, compared with around 117.00 yen just before the intervention. It was at 117.18 yen in New York late Friday and 118.90 yen in Tokyo.
A strong yen makes Japanese exports more expensive in foreign currency terms, making them less competitive overseas. It also reduces the yen value of profits repatriated to Japan from foreign markets.
The world's second largest economy is already on the brink of its fourth recession in a decade.
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