Wednesday, September 1, 1999 Published at 11:38 GMT 12:38 UK
Business: The Economy
Japan ready to intervene
The yen strengthens against the dollar in Tokyo trade
Japan will intervene to support the dollar against the strengthening yen if it becomes necessary, finance minister Mr Kiichi Miyazawa said.
"As I have always said, if exchange rates fluctuates sharply and rapidly and disturb markets, we will respond...We are always watching foreign exchange markets, " Mr Miyazawa said. "Whenever we need to take action, we will act promptly."
Miyazawa's comments come amidst increased fears that the strengthening yen could slow Japanese growth.
The rising yen could slow the Japanese economic recovery, Mr Hubert Neiss, director of the International Monetary Fund's Asia-Pacific operations, warned.
The Japanese yen has risen to a seven- month high against the dollar, spurred on by suggestions that the Japanese economy will grow at a better - than -expected rate.
The IMF is likely to upgrade its growth forecast for 1999 to 0.5% from 0.25%, Mr Neiss added.
Mr Neiss said the government could deal with the problem of a strong yen by pursuing an aggressive monetary policy and intervening, the process by which central banks buy or sell a currency in the market to influence its direction.
Neiss's comments follow speculation that Japan would seek to push its G7 counterparts to jointly intervene to curb the yen's rise.
Mr Haruhiko Kuroda, vice minister of finance for international affairs, was expected to tell a meeting of G7 finance deputies in Berlin on Tuesday that a further rise in the value of the yen could derail Japan's recovery.
Tokyo traders cited the lack of intervention as the reason the dollar weakened against the yen in overnight trading on Wednesday.
Traders have had a mixed bag of Japanese data to interpret.
While unemployment in July was 4.9%, unchanged from June, industrial production is expected to improve in August and September.
This has created the belief that Japan could be heading for a "jobless recovery".
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