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Japan may intervene to tame yen

08-03-2011 09:24 BJT

The 11-hour deal in Washington will avert an unprecedented default, but the threat of a US credit rating downgrade continues to weigh on sentiment. With the dollar continuing to fall, the Japanese currency tested record highs overnight, and analysts say intervention to tame the yen is now a closer possibility.

The yen's overnight ascent near record highs against the dollar has heightened the possibility of intervention to weaken the currency, and for the central bank to follow suit with additional monetary easing.

Yen climbed down from Monday (August 1) peaks and traded around 77.4 to the dollar.

The current yen level is still far above the average of 82.59 that Japanese manufacturers have used to make their current earnings forecasts. Japanese exporters, including carmakers such as Toyota have become increasingly vocal in their call for action to tame the yen's rise.

The Japanese government has also said the currency's persistent strength would hurt an economy struggling to recover after the March 11 earthquake.

Yoshihiko Noda said, "If the strong yen continues, it will unmistakably impact some industries. I want to closely analyze the potential impact. I am in contact with many different people about this matter."

Japan intervened to stem the yen in the aftermath of the March 11 earthquake, when speculation that Japanese investors would sell their overseas assets to fund recovery at home pushed the yen to an all-time high of 76.25.

Editor:Li Wanran |Source: CNTV.CN

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