Kan Says He Hopes Any Action to Curb Yen Won't Prompt Complaints Overseas

Bloomberg.com   |  September 10 2010 1:49 EDT

Japan’s Prime Minister Naoto Kan said he is ready to act as needed to curb the yen’s advance, adding that he hopes foreign countries don’t object should the government intervene.

Kan said today in Tokyo that getting international cooperation to halt the yen’s rise is “difficult,” given that both the European Union and the U.S. are content to see their currencies weaken to boost exports.

“We’re conducting various talks so other countries won’t say negative things when Japan acts,” Kan said at a debate with Ichiro Ozawa before next week’s election for head of the ruling Democratic Party of Japan. “We’re studying now various scenarios examining possible responses from markets when we take a decisive measure.”

The yen’s rise to a 15-year high against the dollar has fueled concerns corporate profits will erode. Kan today unveiled an $11 billion economic stimulus package to boost consumption and create jobs amid signs the economic recovery is stalling. He said today he may compile an extra budget by the end of the year.

Japan’s currency is up 11 percent against the dollar this year, and was trading at 83.94 per dollar at 10:47 a.m. in London, having reached 83.35 two days ago, the strongest level since May 1995.

Bank of Japan Governor Masaaki Shirakawa told Cabinet ministers today that the effect of the yen’s gains is large and international discussion on currencies is important.

‘Difficult Problems’

U.S. Treasury Secretary Timothy F. Geithner declined to comment about the prospects for currency intervention in an interview this week, instead saying that Japanese officials should do what they can to help their economy grow.

“They’re working through some difficult problems,” Geithner said on Bloomberg Television. “My view is they should be focusing like we are on how to make sure they’re reinforcing recovery in Japan and doing things that are going to help.”

Ozawa said at today’s debate that Japan should strongly express its intention to intervene in the foreign-exchange market. The government hasn’t taken such action since March 2004, when the yen was around 109 per dollar.

The Bank of Japan, at the direction of the Ministry of Finance, sold 14.8 trillion yen ($176 billion) in the first quarter of 2004, after record sales of 20.4 trillion yen in 2003.