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Monday, 24 June, 2002, 06:52 GMT 07:52 UK
Japan moves to stem dollar slide
Japanese currency traders
The Japanese currency is close to seven-month lows
Japan's central bank has intervened to push down the yen against the dollar, fearful of the effect of a strong currency on the country's exporters.

Strong buying of dollars by the Bank of Japan helped boost the US currency as high as 122.80 yen, up from the the 121.11 it hit earlier in the day.

The dollar's low for the year so far has been 120.80, but policy makers around the world have been alarmed at its rapid slide in recent weeks.

Weak US shares, combined with discouraging economic statistics, have persuaded many investors to move their money out of the US.

In Japan, highly dependent on exports of electronics and other products, the strong yen has caused concern among politicians and business leaders.

Shares struggle

Earlier in the day, the strong yen had put further pressure on Japanese shares.

Car giant Honda, one of the country's main exporters and a major player in the US market, saw its shares drop almost 4% to a seven-month low.

Other firms with heavy involvement in the US, including Toyota, Sony and Fuji, also dropped sharply.

Coming just before the close of the day's trading, the announcement of central bank yen intervention helped buoy Tokyo share prices.

The benchmark Nikkei share index closed up 1.1% at 10,471.32, after touching a four-month low of 10,169.07 in the morning session.

All together now?

Few expect Bank of Japan intervention to have a lasting effect, however.

In the meantime, there is growing pressure on world leaders for concerted efforts to prop up the dollar, which has also touched lows against the euro, pound and Swiss franc.

The G8 summit of rich countries, currently under way in Canada, could be a venue for such joint intervention, as it has in the past.

But the political will for concerted intervention may not be universal: the US is not absolutely in favour of a strong dollar, and Europe has enjoyed the recent unaccustomed strength of the euro.


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