Tuesday, September 14, 1999 Published at 07:58 GMT 08:58 UK
Business: The Economy
Japan intervenes on yen
The Bank of Japan's intervention spurred overnight trade
The Japanese central bank has intervened in the foreign exchange markets to buy US dollars, with the intention of putting a stop to the yen's rise.
Many had feared that the strong yen could harm the Japanese economy's fragile chances of recovery.
The yen has been strengthened by increased capital flows, as investors return to the stock market, in the belief that the economy has turned a corner. This trend is exacerbated by a belief that the US dollar will be weighed down by the US trade deficit.
When the Bank of Japan bought dollars, it boosted the currency to a high of 107.30 yen.
Minister of Finance Kiichi Miyazawa said that the government will not hesitate to intervene if the yen's rise becomes excessive. Mr Miyazawa said that the yen's rise to around 106 to the dollar earlier in the day was what they deemed excessive.
"We have no choice but to intervene if the yen rises excessively, and I think the yen's movement of late has been excessive," he said.
His view was lent support by the economic planning agency director general Taichi Sakaiya, who said the government now needs to take action to stem any further rise in the value of the yen, which will jeopardise the ongoing fragile economic recovery.
The intervention follows a split between the government and the central bank over the best way to deal with the rising yen.
The government feared that the strong yen could hurt exporters, who are instrumental in pulling the country out of recession. This contrasts with a Bank of Japan view that currency intervention is pointless and that the government's proposals could be inflationary.
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