New Japanese finance minister calls for weaker yen

Japan's new finance minister called for a weaker yen, sending the currency sharply lower on speculation that he might order official intervention.

New Japanese finance minister calls for weaker yen

Japan's new finance minister Thursday called for a weaker yen, sending the currency sharply lower on speculation that he might order official intervention.

Naoto Kan, a former health minister with little experience in financial matters, said at his first press conference since replacing Hirohisa Fujii that it would be "preferable" if the yen's recent decline continued.

Kan, 63, said he would work with the Bank of Japan to achieve an appropriate level.

Kan saved his most direct remarks for the foreign exchange market, calling for a weaker yen and stirring speculation the government may be more inclined to stem a sharp yen rise.

"Many businesses say it is appropriate for the dollar to be around 95 yen for trade, so we must work with the Bank of Japan to bring it to appropriate levels taking into account the various effects currencies may have on the Japanese economy," Kan, who is also deputy prime minister, said.

"At the moment, (dollar/yen) has largely corrected to a weak yen compared with the time when the so-called Dubai shock occurred. It would be nice if the yen weakened a bit more," he said.

Many business leaders have said that a yen exchange rate in the mid-90s to the dollar "would be appropriate," Kan added. It is rare for Japanese cabinet ministers to comment on specific currency levels.

He said he would "work hard to bring (the yen) to the appropriate level, considering the impact that foreign exchange has on the Japanese economy."

While Japan has not intervened in the currency market since March 2004, allowing the yen to find its own level against the dollar, the finance minister's comments on currencies can have a big impact on trading.

Kan said he hadn't thought once about fiscal austerity when the government compiled the record 92.3 trillion yen 2010/11 budget. He added that whether Japan should continue with stimulus spending would depend on how the economy fares in future.

"We must avoid a double-dip (recession) with the help of monetary policy," he told reporters.

The dollar rose to 92.73 yen in the wake of the remarks, from around 92.2 yen shortly before Kan spoke.


Agencies

Last Mod: 07 Ocak 2010, 14:06
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