Even as the yen charged to a fresh postwar record high Friday and piled more pressure on the Japanese economy, the silence from outgoing Prime Minister Naoto Kan and his close aides was deafening.
Kan, who has admitted economic policies are not his forte, has left the task of dealing with the yen's appreciation since the March 11 earthquake-tsunami disaster almost entirely with the Finance Ministry.
Even after the yen marked a record high of 75.95 yen in New York late Friday, topping the previous high of 76.25 yen posted March 17, the prime minister's official residence remained remarkably silent. Instead, the focus inside seemed to be more on the process of finding a successor to Kan as the nation's political leader.
Aides quoted the prime minister as saying he intends to "keep watching the situation" for the time being before deciding whether the government and the Bank of Japan should intervene in the markets again or launch further quantitative monetary easing.
Chief Cabinet Secretary Yukio Edano, when asked at a press conference Friday about the response to the strengthening yen, said only the government will "watch the foreign exchange situation even more carefully."
Many officials close to Kan believe there is little Japan can do to rein in the yen, other than a market intervention and quantitative easing, because the yen's climb has been fueled by financial unrest in the United States and Europe, sources said.
However, even some of Kan's aides have wondered aloud whether the prime minister has lacked urgency when dealing with currency moves that are battering Japanese exporters.
"The prime minister can't afford to worry about that" because he is tied up with his pending resignation, one aide said. "The fact that investors are gobbling up the yen despite the political situation here shows just what bad shape the economies of the United States and Europe are in."
After the credit rating of long-term Japanese government bonds was downgraded in January, Kan caused an uproar when he admitted he was "out of touch with such things."
A source close to Kan said the prime minister's awareness of his ineptitude in handling economic policies had made him "less interested in currency woes than the nuclear crisis and energy policies."
Government inaction also reflects the fact that the administration of the lame-duck prime minister can hardly respond flexibly to fast-changing currency markets, according to analysts.
Discussions on the details of a third supplementary budget for fiscal 2011 likely will make no progress before a successor to Kan as prime minister is selected, they said.
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