TOKYO - A Japanese Finance Ministry official said the government may sell yen again after last week's move if it sees speculative trades that drive the currency higher.
Further intervention would "maintain the effect and warn those who make unusual moves" in the currency market, Vice-Finance Minister Fumihiko Igarashi said on public broadcaster NHK television yesterday.
Japan sold yen in the foreign-exchange market last week for the second time this year to secure an economic recovery following the March earthquake and tsunami.
Investors have been buying the currency as a haven from sovereign debt concerns in Europe and the United States, which had its credit rating cut for the first time by Standard & Poor's.
Japan acted alone in selling the yen last week, in contrast with a previous intervention in March that was coordinated among Group of Seven nations. The Bank of Japan added 10 trillion yen of monetary stimulus measures on Aug 4, hours after the Finance Ministry's move.
"There is a good chance speculators will build up yen-buying positions again, depending on future developments, given that the present intervention is unilateral," Goldman Sachs Group economists Naohiko Baba and Chiwoong Lee wrote in a note published on Saturday. "The impact will not be as large or as sustainable as a coordinated intervention."
The Goldman Sachs economists said that Japan has been buying US Treasuries when it sells yen, leaving it with more than ¥30 trillion (S$465 billion) in unrealised losses that will test the government's "true determination" to combat the currency's rise.
Japan maintains its trust in the ability of the US to pay its debts and expects Treasuries to remain an attractive investment, a Japanese government official said yesterday on condition of anonymity. Japan is the second-largest international investor in Treasuries, behind China. BLOOMBERG
Further intervention would "maintain the effect and warn those who make unusual moves" in the currency market, Vice-Finance Minister Fumihiko Igarashi said on public broadcaster NHK television yesterday.
Japan sold yen in the foreign-exchange market last week for the second time this year to secure an economic recovery following the March earthquake and tsunami.
Investors have been buying the currency as a haven from sovereign debt concerns in Europe and the United States, which had its credit rating cut for the first time by Standard & Poor's.
Japan acted alone in selling the yen last week, in contrast with a previous intervention in March that was coordinated among Group of Seven nations. The Bank of Japan added 10 trillion yen of monetary stimulus measures on Aug 4, hours after the Finance Ministry's move.
"There is a good chance speculators will build up yen-buying positions again, depending on future developments, given that the present intervention is unilateral," Goldman Sachs Group economists Naohiko Baba and Chiwoong Lee wrote in a note published on Saturday. "The impact will not be as large or as sustainable as a coordinated intervention."
The Goldman Sachs economists said that Japan has been buying US Treasuries when it sells yen, leaving it with more than ¥30 trillion (S$465 billion) in unrealised losses that will test the government's "true determination" to combat the currency's rise.
Japan maintains its trust in the ability of the US to pay its debts and expects Treasuries to remain an attractive investment, a Japanese government official said yesterday on condition of anonymity. Japan is the second-largest international investor in Treasuries, behind China. BLOOMBERG
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