TOKYO — Japan's new finance minister Jun Azumi on Tuesday reiterated that he will try to convince his Group of Seven counterparts that a strong yen poses a threat to the world's third-biggest economy.
"I will clearly tell them that we have strong concerns over excessive rises in the yen and also have great interest in any speculative movement" in the currency market, Jun Azumi said ahead of a Friday meeting of top finance officials from the G7 leading industrialized nations in Marseille, France.
Analysts say the meeting will have added significance after the Swiss National Bank set on Tuesday a minimum exchange rate of 1.20 francs per euro, saying the value of its currency, which like the yen is seen as a safe haven, was a threat to the economy.
It said it was "prepared to buy foreign currency in unlimited quantities".
More countries, including Japan, could now be encouraged to intervene to protect their respective economies from the impact of sharp fluctuations in currency markets, said analysts.
"The SNB's action could make it relatively easier for the Ministry of Finance and Bank of Japan to take further action," Koji Fukaya, director of fixed income and global foreign exchange research at Credit Suisse, told Dow Jones Newswires.
Azumi is under pressure to help shield Japan's economy from a strong yen as concerns grow that the strength of the unit could undermine its efforts to recover from the March 11 disasters, the impact of which pushed it into recession.
A strong yen erodes the repatriated profits of the nation's exporters while making it harder for domestically-made products to be cost competitive when sold overseas.
Such concerns have prompted worries that Japan faces a hollowing out of industry, with more companies likely to consider shifting production and jobs abroad.
The yen hit a post-war high of 75.95 against the greenback in August. However, on Tuesday it fell to 77.24 versus the dollar from 76.80 earlier in the day in what analysts said was a knock-on effect from the Swiss move.
Azumi's predecessor Yoshihiko Noda oversaw three interventions -- of which two were unilateral -- to weaken the yen with little lasting impact during his time as finance minister. Noda was confirmed as Japan's sixth premier in five years on Friday.
Azumi has said he wants to cut Japan's corporation tax, which is currently around 40 percent, as previously proposed by Tokyo, and offer incentives for Japanese firms to keep operating in the country despite the yen's rise.
The Bank of Japan's policy board on Tuesday began a two-day meeting.
The G7 groups Germany, Canada, the United States, France, Britain, Italy and Japan.Copyright © 2011 AFP. All rights reserved. More »