As the value of the Japanese yen hit a 15-year high against the US dollar, the country’s policymakers stepped up their rhetoric over the steep rise in the currency.
Prime Minister Naoto Kan said it was “rough.” However for the moment the government does not plan to intervene directly.
The fear is that the strong yen could harm Japan’s fragile economic recovery.
Finance Minister Yoshihiko Noda said: “The government considers that extreme movements of the exchange rate and immeasurable variations could badly impact the economy and the market.”
But currency strategist Naomi Fink thinks what is worrying the government more is speculators: “I think the authorities are watching speculative activity, perhaps even more closely than the effects of the yen on the real economy itself, since we’ve seen a pretty good earnings season from Japan Inc.”
Japanese share prices fell; particularly those of big exporters, like Nintendo, Sony and construction machinery maker Komatsu which were already under pressure because of signs that the economic recovery is weakening in the US and China.