Japan PM voices concern over yen's 'rapid' rise

I / Tokyo August 12, 2010, 17:03 IST

Japanese government leaders voiced concerns about the strength of the yen today in a "verbal intervention" aimed at taming the recent rise of the unit, which could threaten a fragile recovery.

The dollar, which hit a 15-year low of 84.73 yen overnight as investors sought the safe-haven unit amid renewed jitters over the health of the global economy, moved as high as 85.79 yen after the comments, before easing.

Prime Minister Kan said today the currency's advance was too "rapid" and agreed with his right-hand man and Chief Cabinet Secretary Yoshito Sengoku to keep a close eye on the issue, Japanese media reports said.

The greenback rose back above the key 85-yen level on news that Japanese officials showed concern over the unit's strength, which poses a threat to the export sector driving Japan's fragile economic rebound.

But cooling earlier speculation that Japan may be ready to intervene in currency markets for the first time since 2004, finance minister Yoshihiko Noda said he would monitor the situation.

The government will watch currency markets "with the greatest concern," Noda told reporters at the finance ministry, adding however that he would "refrain from making comments on possible intervention."

Bank of Japan governor Masaaki Shirakawa said he noted the recent volatility in financial markets amid concerns over the US recovery.

"There are substantial fluctuations in the foreign exchange and stock markets mainly against the backdrop of growing uncertainty about the outlook for the US economy," Shirakawa said in a statement.

Noda earlier this week said he wanted the Bank of Japan to "cooperate" more with the government to tackle the rising yen, in a sign of fresh pressure on the body from officials.