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Japan intervenes in foreign currency market to stem yen's rise against dollar
TOKYO (AP) ' Japan intervened in the foreign currency market Thursday to stem the yen's rise against the dollar.
The coordinated intervention in international currency markets marked the first by the G-7 countries since the fall of 2000, when the G-7 intervened to bolster the euro.
Finance Minister Yoshihiko Noda said the intervention was taken because the strong yen could hurt the economy and slow Japan's efforts to recover from its March 11 earthquake and tsunami.
"The one-sided rise of the yen could have a negative impact," he told reporters. "We have decided to intervene."
Noda did not specify the amount of the intervention.
The dollar, weakened by the dimming U.S. economic outlook, fell as low as 76.29 yen Monday. It hit a record post-World War II low of 76.25 yen in the days following the March 11 quake disaster.
It was trading at around 78 yen immediately after the intervention.
A strong yen is painful for Japan because it reduces the value of foreign earnings for companies like Toyota Motor Corp. and Nintendo Co. and makes Japanese goods more expensive in overseas markets.
The yen's surge after the March disasters prompted the Group of Seven major industrialized nations to work together to weaken the Japanese currency. Officials feared that the fast-rising yen would exacerbate the economic impact of the disaster.
Japanese companies that based their financial forecasts assuming a weaker yen may be forced to downgrade expectations if yen strength persists. Nintendo, for example, assumes 83 yen to the dollar this fiscal year through March 31. About 80 percent of the video game and console maker's sales are outside of Japan.
The yen's resurgence after the G7 action had triggered speculation in financial markets that Japan might once again intervene ' this time alone ' by selling the yen. As the yen dipped to the low 77s Thursday morning, Noda made his announcement that Tokyo had decided to act.