apan’s Fujii Says Yen Should Reflect Economic Fundamentals
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By Mayumi Otsuma and Kyoko Shimodoi
Sept. 19 (Bloomberg) -- Japan’s Finance Minister Hirohisa Fujii said foreign-exchange rates should reflect economic fundamentals, two days after sending the yen higher by saying he didn’t support a “weak” currency.
“Foreign-exchange rates should be determined by the state of a nation’s economy, that’s what’s natural,” Fujii, who took office Sept. 16, told reporters in Tokyo. Asked about benefits of a stronger currency, he said “to answer such a leading question would label me as a supporter of a strong yen.”
Fujii’s remarks yesterday indicate he opposes intervening in the currency market to restrain the yen, whose advance this week to the highest level since February may threaten Japanese exporters’ earnings. His comments this week are also a shift in tone from the outgoing government, which repeatedly stressed support for the “strong” dollar policy followed by the U.S.
“Fujii thinks currencies should be set in a free economy,” said Masamichi Adachi a senior economist at JPMorgan Chase & Co. in Tokyo. The previous Liberal Democratic Party government “had said a strong dollar is desirable for Japan but their intention was to control the market” and hold down the yen, he said. “Fujii doesn’t agree with that view.”
Investors are seeking to gauge the exchange-rate stance of the Democratic Party of Japan-led government after it took power for the first time this week. Former Finance Minister Kaoru Yosano in June said that his government had an “unshakable” trust in the strong-dollar policy followed by the U.S.
Yen’s Advance
The yen traded at 91.29 per dollar in late Tokyo trading. It reaching as high as 90.13 on Sept. 16, its highest level since February, after Fujii told reporters he doesn’t support a “weak yen.” He said then that exchange-rate movements weren’t “excessive,” and that “in principle” he opposes currency intervention.
Policy makers around the world should avoid trying to “artificially weaken” their currencies to promote exports because that would eventually hamper global growth, Fujii, a 77- year-old lawmaker who served as finance minister 1993 to 1994, also said yesterday.
The yen has gained against all 16 of the world’s major currencies in the past year, making exporters’ products less competitive. A stronger rate may also depress prices of imported goods. The Democratic Party of Japan won the Aug. 30 election pledging to support the purchasing power of consumers battered by two decades of economic stagnation.
No Intervention
Japan’s governments have refrained from intervening in currency markets since March 2004 after purchasing record amounts of dollars as the yen climbed.
Fujii also said yesterday that he would respect the central bank’s autonomy and allow it to decide when to roll back emergency-credit programs that include buying corporate debt and providing limitless lending backed by collateral, which are due to expire Dec. 31.
“The DPJ has deep respect for the Bank of Japan’s independence,” Fujii said. “As for the programs, I want to refrain from making comment.”
To contact the reporter on this story: Mayumi Otsuma in Tokyo at [email protected]
Last Updated: September 18, 2009 11:01 EDT
Japan?s Fujii Says Yen Should Reflect Economic Fundamentals - Bloomberg.com
Share | Email | Print | A A A
By Mayumi Otsuma and Kyoko Shimodoi
Sept. 19 (Bloomberg) -- Japan’s Finance Minister Hirohisa Fujii said foreign-exchange rates should reflect economic fundamentals, two days after sending the yen higher by saying he didn’t support a “weak” currency.
“Foreign-exchange rates should be determined by the state of a nation’s economy, that’s what’s natural,” Fujii, who took office Sept. 16, told reporters in Tokyo. Asked about benefits of a stronger currency, he said “to answer such a leading question would label me as a supporter of a strong yen.”
Fujii’s remarks yesterday indicate he opposes intervening in the currency market to restrain the yen, whose advance this week to the highest level since February may threaten Japanese exporters’ earnings. His comments this week are also a shift in tone from the outgoing government, which repeatedly stressed support for the “strong” dollar policy followed by the U.S.
“Fujii thinks currencies should be set in a free economy,” said Masamichi Adachi a senior economist at JPMorgan Chase & Co. in Tokyo. The previous Liberal Democratic Party government “had said a strong dollar is desirable for Japan but their intention was to control the market” and hold down the yen, he said. “Fujii doesn’t agree with that view.”
Investors are seeking to gauge the exchange-rate stance of the Democratic Party of Japan-led government after it took power for the first time this week. Former Finance Minister Kaoru Yosano in June said that his government had an “unshakable” trust in the strong-dollar policy followed by the U.S.
Yen’s Advance
The yen traded at 91.29 per dollar in late Tokyo trading. It reaching as high as 90.13 on Sept. 16, its highest level since February, after Fujii told reporters he doesn’t support a “weak yen.” He said then that exchange-rate movements weren’t “excessive,” and that “in principle” he opposes currency intervention.
Policy makers around the world should avoid trying to “artificially weaken” their currencies to promote exports because that would eventually hamper global growth, Fujii, a 77- year-old lawmaker who served as finance minister 1993 to 1994, also said yesterday.
The yen has gained against all 16 of the world’s major currencies in the past year, making exporters’ products less competitive. A stronger rate may also depress prices of imported goods. The Democratic Party of Japan won the Aug. 30 election pledging to support the purchasing power of consumers battered by two decades of economic stagnation.
No Intervention
Japan’s governments have refrained from intervening in currency markets since March 2004 after purchasing record amounts of dollars as the yen climbed.
Fujii also said yesterday that he would respect the central bank’s autonomy and allow it to decide when to roll back emergency-credit programs that include buying corporate debt and providing limitless lending backed by collateral, which are due to expire Dec. 31.
“The DPJ has deep respect for the Bank of Japan’s independence,” Fujii said. “As for the programs, I want to refrain from making comment.”
To contact the reporter on this story: Mayumi Otsuma in Tokyo at [email protected]
Last Updated: September 18, 2009 11:01 EDT
Japan?s Fujii Says Yen Should Reflect Economic Fundamentals - Bloomberg.com
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