Yen gains after minister warns of unit's weakness
AFPTOKYO -- The yen rebounded in Asian trade Tuesday after Japan's economy minister warned over the currency's sharp decline, saying it could hit consumers by making imported goods more expensive.
January 16, 2013, 12:00 am TWN
The dollar — which changed hands at 89.56 yen in morning trade and 89.45 yen in New York on Monday — dropped to 88.99 yen after Economy Minister Akira Amari's comments.
“Obviously, an excessively weak yen will be reflected in import prices,” he told a regular Tokyo press briefing.
“It might help exports, but it could also have negative effects on the lives of the public.”
His remarks also helped send the euro lower to 118.80 yen from 119.93 yen Tuesday morning and 119.65 yen in New York.
The yen has tumbled since late last year as the country's new Prime Minister Shinzo Abe came to power with promises of massive spending and calls for aggressive central bank easing to boost the economy.
Three months ago, the dollar traded below the 79 yen level, after hitting a low around 75 yen in late 2011, sparking appeals for action from Japan's exporters whose products become pricier overseas when the unit is strong.
“Everyone was... holding dollar-yen long positions, and was waiting for a profit-taking cue before the BOJ meeting on January 21-22,” a senior dealer at a major Japanese bank told Dow Jones Newswires.
Earlier Tuesday, the yen had slipped on comments from Bank of Japan governor Masaaki Shirakawa who said Japan would pursue “aggressive” easing to inject new life into the world's third-largest economy.
His comments are not new, but they fuelled speculation that the central bank would launch further policy measures — which tend to weigh on the currency — after its meeting.
The BOJ has been under heavy political pressure as Abe presses the bank to adopt an annual inflation target of two percent as part of his plan to inject life into the moribund economy.
Against the dollar, the euro dipped to US$1.3350 from US$1.3376 in US trading.
The 17-nation unit had been surging since late last week when European Central Bank chief Mario Draghi said there was “a significant improvement in financial market conditions” in the single currency bloc.
Markets were also keeping a close eye on U.S. December retail sales data to be released later Tuesday, which covers the key holiday-shopping season.