Japan says to act vs yen rise if needed after G20

By Rie Ishiguro and Tetsushi Kajimoto

TOKYO (BestGrowthStock) – Japan’s finance minister warned on Tuesday Tokyo was prepared to “act decisively” in markets if needed and voiced its irritation with the yen’s climb to another 15-year high following the Group of 20 finance chiefs’ meeting.

Yoshihiko Noda called Monday’s currency moves “one-sided” and said he was watching the market “with great interest” — a language similar to one Tokyo had used in the build-up to last month’s intervention. However, he also said market conditions were not the same as in September.

“When we intervened in September the yen was rising on its own. Since then various currencies, not just the yen, have been rising against the dollar,” he told parliament.

Investors took the G20’s weekend pact to shun competitive devaluations as a green light to resume selling the dollar, fueled by expectations that the Federal Reserve will pump more money into the sputtering U.S. economy.

That pushed the dollar to a new 15-year low at 80.41 yen on Monday, not far off its all-time low of 79.75 and below levels at which Japan intervened by selling yen in mid-September.

The U.S. currency was trading at around 80.75 yen on Tuesday.

While some analysts believe the G20’s commitment to market-determined exchange rates would make it harder for Japan to intervene again, others said the language of the G20 was too general to act as a deterrent.

“The market generally took the G20 statement as “no surprise” so it did not reverse the tide of weak dollar due to expectation for the Federal Reserves’ quantitative easing next month,” said Masafumi Yamamoto, chief Japan currency strategist at Barclays Capital.

“But it did not rule out the possibility of intervention either,” Yamamoto said, referring to a G20 declaration that economies with reserve currencies will be vigilant against excess volatility and disorderly movement in exchange rates.

In fact, Noda highlighted that part of the weekend meeting’s message: “When there are excessive and disorderly currency moves, Japan will cooperate accordingly with other countries,” he told parliament.

“While there are various ways of cooperation, G20 nations have shifted from merely recognizing the harm of excessive and disorderly moves to acknowledging the need to act against (market moves) that could have adverse effects.”

But Barclays’ Yamamoto and other analysts say Japan will probably choose to wait for the outcome of Fed’s November 2-3 meeting, before taking any action on currencies.

(Additional reporting by Leika Kihara; Editing by Tomasz Janowski)

Japan says to act vs yen rise if needed after G20