Tamaki Says Abrupt Yen Moves May Prompt Intervention
Japan’s new top currency official said the government would consider stepping into the foreign- exchange market only if abrupt yen moves hurt the economy.
“We’ll make judgments based on whether excessive movements in the currency market will adversely affect the economy,” Rintaro Tamaki, who this week replaced Naoyuki Shinohara as vice finance minister for international affairs, said in a group interview in Tokyo today.
The yen gained against all 16 of the world’s major currencies in the past year, and has surged 3 percent against the dollar this month, making exporters’ products less competitive while lowering import costs. Japan last stepped into the foreign-exchange market to sell yen in 2004.
“Japanese authorities may be saying that excessive yen strength is undesirable, given the present level of the yen,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency trader. “The speed of such a move would likely be a problem for them.”
Tamaki affirmed the view held by the Group of Seven nations that excessive currency moves are undesirable, while adding that the G-7’s stance is “based on the view that the market decides foreign exchange rates.”
The yen rose to 93.64 per dollar at 5:33 p.m. in Tokyo from 93.93 late yesterday in New York.
Never Say Never
“I won’t comment on whether we’ll intervene in the market or not, but if you were to ask me if we’d never intervene, the answer would be no,” Tamaki said.
Tamaki, 55, said Japan will keep supporting the dollar’s status as the world’s reserve currency and there’s no plan to change a policy of investing mainly in U.S. Treasuries, echoing remarks made by Yasutake Tango, the new vice finance minister, in an interview last week cash advance.
Their stance contrasts with that of Masaharu Nakagawa, the shadow finance minister in the opposition Democratic Party of Japan, which leads in polls ahead of elections next month. He said in an interview last week that the nation should consider shifting its foreign reserves away from the dollar.
Japanese investors are the biggest foreign holders of Treasuries after China with $677.2 billion of the securities in May. Japan’s total foreign reserves total $1.02 trillion.
“Japan’s foreign reserves are for the stabilization of the foreign exchange market,” Tamaki said. “Liquidity and safety is the most important factor when we manage the foreign reserves.”
Record Sales
Japan hasn’t entered into the foreign-exchange market since the central bank, at the request of the Finance Ministry, sold a record 14.8 trillion yen ($158 billion) in the first quarter of 2004 in an effort to weaken the currency.
The G-7 said in April that “excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.”
Tamaki, who served under Shinohara as the head of the ministry’s international affairs department, said the global economy remains in a severe state.
Tamaki worked at the Japanese embassy in Washington from 2002 to 2005. He’s a certified wine adviser and likes classical music and opera.
Some lawmakers at the opposition DPJ grilled Tamaki in parliament on how he handled former Finance Minister Shoichi Nakagawa’s misbehavior at a G-7 press conference in Italy in February. Nakagawa resigned after being criticized for appearing drowsy and slurring his speech at a news conference following the meeting.