Currency loses 5 per cent against dollar as Bank of Japan sells yen
Yen hit post-war high a few days ago. The authorities intervene for the third time in 2011 to contain rise. Speculation and loss of confidence towards the United States and Japan are the main causes. The climb harms Japan’s export-oriented economy.
Tokyo (AsiaNews/Agencies) – The yen dropped by 5 per cent to its lowest point in three years against the US dollar after the Japanese government intervened for the third time this year to weaken it after it hit a post-war high.
Today it traded at 79.18 yen in Tokyo trade against 75.82 yen in New York late on Friday, off a mid-morning high of 79.49. The move also saw the euro rise sharply to 111.20 yen from 107.29 yen.
Finance Minister Jun Azumi said that Japan's action was necessary because the value of the currency did not reflect that actual state of the Japanese economy, blaming the yen’s rise on speculation.
A strong yen increases the cost of Japanese products and badly affects the country’s export-oriented economy.
Azumi announced that further action would be taken against “speculative moves” until the appropriate rate was reached.
The yen is a safe bet that investors buy to protect themselves against market volatility due to the European debt crisis and the slowdown of the US economy.
The Bank of Japan (BOJ) intervened in March and August, selling yen (about 4.5 trillion in August) to slow down its appreciation. However, such action proved short-lived as the yen began its upward trend again.
For this reason, analysts believe that the decline would be short-term this time as well. Experts note in fact that the rise of the yen is a sign of the limited confidence investors have in the euro zone, despite a new rescue plan agreed on 27 October.
Despite a strong yen, the Japanese economy remains in crisis following the 11 March earthquake and tsunami.
The government has tried to stimulate the economy with new capital, announcing spending worth 92 trillion yens in post-tsunami reconstruction. However, the country’s accumulated debt stands at 924 trillion (US$ 11.3 trillion).
Today it traded at 79.18 yen in Tokyo trade against 75.82 yen in New York late on Friday, off a mid-morning high of 79.49. The move also saw the euro rise sharply to 111.20 yen from 107.29 yen.
Finance Minister Jun Azumi said that Japan's action was necessary because the value of the currency did not reflect that actual state of the Japanese economy, blaming the yen’s rise on speculation.
A strong yen increases the cost of Japanese products and badly affects the country’s export-oriented economy.
Azumi announced that further action would be taken against “speculative moves” until the appropriate rate was reached.
The yen is a safe bet that investors buy to protect themselves against market volatility due to the European debt crisis and the slowdown of the US economy.
The Bank of Japan (BOJ) intervened in March and August, selling yen (about 4.5 trillion in August) to slow down its appreciation. However, such action proved short-lived as the yen began its upward trend again.
For this reason, analysts believe that the decline would be short-term this time as well. Experts note in fact that the rise of the yen is a sign of the limited confidence investors have in the euro zone, despite a new rescue plan agreed on 27 October.
Despite a strong yen, the Japanese economy remains in crisis following the 11 March earthquake and tsunami.
The government has tried to stimulate the economy with new capital, announcing spending worth 92 trillion yens in post-tsunami reconstruction. However, the country’s accumulated debt stands at 924 trillion (US$ 11.3 trillion).
.png)
See also
