Japan's central bank drives yen lower

The Bank of Japan (BoJ) has intervened in the global foreign exchange markets, forcing the yen lower against the dollar.

The BoJ sold yen earlier on Friday, pushing the currency down to 123.97 to the dollar, from 123.07 late on Thursday.

The move came in response to a steady rise in the value of the country's currency which threatened to blunt Japanese exporters' competitive edge.

It was the BoJ's third intervention in the currency markets in the last two weeks.

Hopes for an export-led recovery

The Japanese government is relying on buoyant export demand to pull the country out of its economic doldrums.

But a rise of about 8% in the value of the yen against the dollar since the start of the year, making Japanese exports more expensive in the US, has threatened to undermine the recovery.

The yen continued to appreciate on Friday morning despite a decision by credit rating agency Moody's Investors Service to downgrade Japanese government bonds to the same status as those of Latvia or Poland.

The ratings downgrade was widely anticipated, analysts said.

The yen's new-found strength partly reflects a tentative upturn in Japanese economic growth after a long period of stagnation.

But it is also due to dwindling confidence in US companies' ability to deliver strong earnings growth this year, with many investors pumping money into Japanese stocks instead.

The yen had fallen back to 124.05 against the dollar and 116.30 to the euro at about 1200 GMT on Friday.