Japan says high yen 'harming economy'

By Roland Buerk
BBC News, Tokyo

The dollar dropped to 84 yen - the lowest level for years

Japan's finance minister has said the strength of the yen is harmful to the country's economy.

In trading the currency has touched 84 to the dollar, the US currency's lowest level since the mid-1990s.

A high yen damages the competitiveness of Japanese exports, which have been the engine of the country's growth.

Finance Minister Hirohisa Fujii said the government was watching closely, but did not signal immediate intervention.

Unemployment falls

Everyone in Japan knows that the flimsy one yen coin is so light it can be made to float on water, but now the currency is sinking to the bottom of the glass as the dollar weakens.

Mr Fujii said the strength of Japan's currency was "one sided" and harmful to the economy.

With much of the relative strength caused by dollar selling rather than yen buying, there may be little the government can do alone.

Japan is emerging from its worst recession since the end of World War II.

Figures out on Friday showed unemployment had fallen.

But the strong yen eats into the competitiveness of exporters like Sony, Toyota and Honda.

Japan's recovery is threatened by deflation, or falling prices.

And the strength of the currency threatens to make that worse too because imports and raw materials become cheaper.