Intervention in exchange market remains short-term option: Noda

The government views currency market intervention as a short-term option for weakening the yen, Finance Minister Yoshihiko Noda said Friday.

Emphasizing the need to make budgetary arrangements to ease tensions over the yen's yearlong ascent, Noda also said the situation would be dealt with in a "timely and appropriate" manner, hinting another dip into the foreign-exchange markets and further monetary easing by the Bank of Japan have not been ruled out.

"We may intervene or respond in various other ways, including monetary policy, for the time being," Noda said.

If the trend is entrenched, however, the government will need to formulate a long-term response to handle the fallout, which could involve the use of emergency measures in a third supplementary budget for fiscal 2011.

The intervention threat continues at a time when major exporters are taking big losses from the yen's de facto rise against the limping dollar and other currencies, eroding the global competitiveness of Japan's manufacturers. The dollar has been hovering in the mid-¥76 level, flirting with its postwar record of ¥76.25 set in March.

The government is now reworking the extra budget, which was originally aimed at financing efforts to rebuild from the March 11 earthquake and tsunami.

Noda acknowledged that the yen's rise is still being influenced by speculative bets. The minister also called for closer cooperation among the Group of Seven leading economies.

View the original article here