Azumi: "Foreign exchange rates should reflect the real economy"
The yen went up to a post-war high of 75.32 per dollar
The government is worried that a strengthened yen will impact its economy, which relies heavily on exports
The Japanese government stepped in Monday to weaken the yen, after it climbed to a post-World War II high against the dollar.
Finance Minister Jun Assume said Japan intervened unilaterally at 10:25 a.m. It was the third intervention this year.
“Foreign exchange rates should reflect the real economy and fluctuate within the range of common sense. Otherwise it will distort the real economy,” Azumi said. “I decided it (the intervention) this morning as I cannot tolerate such appreciation.”
The yen went up to the post-war high of 75.32 per dollar early Monday. The intervention immediately sent it tumbling to 79 per dollar.
The government is worried that a strengthened yen will impact its economy, which relies heavily on exports. The country has only now begun to recover from the devastating aftereffects of a March 11 earthquake and tsunami.
“The yen’s appreciation might close down factories and I cannot tolerate it,” Azumi said.
For every 1 yen appreciation against the dollar, Toyota, the car manufacturer, loses 30 billion yen ($380 million) in profits.
The stock market, however, lost the upward momentum after an initial 100-point gain as some analysts expressed skepticism about the effectiveness of the intervention.
“The question is how long will the effect of the intervention continue,” said Toshihiko Matsuno, a senior strategist of SMBC Friend Securities. “The market is looking at the past examples. If this is a one-time only, the effect would be limited. It all depends how far the government is ready to intervene. It’s a battle between the market and the government.”