By Stephen Cannon, BridgeNews
Tokyo--Jan. 10--Despite the yen hitting a new 17-month low against the U.S.dollar Wednesday Japan's Ministry of Finance was not planning any action to boost the flagging currency said finance chief Kiichi Miyazawa. "There's nothing to do but watch (foreign exchange markets) for a while," Finance Minister Miyazawa said.
The U.S. dollar broke above 117 yen in morning trading, a 17-and-a-half-month high of 117.19 yen. But the Japanese currency recovered later as exporters used the 5% fall in the currency over the preceding month to repatriate overseas earnings, said traders.
The yen firmed to 116.30 by 19:10 Japan time. Miyazawa said he discussed foreign exchange with Japan's Vice Finance Minister for International Affairs Haruhiko Kuroda earlier Wednesday. The vice minister told Miyazawa that despite the dollar's strengthening against the yen, the volume of trade in currency markets had not been large.
The finance chief said Kuroda told him that speculators are largely waiting on the sidelines of the foreign exchange market. And Miyazawa surmised that the dollar's climb against the yen had been sparked by "the small surprise from the Fed's (Federal Reserve's) interest rate cut" last week. This, said Miyazawa, "made people want to wait and see how the economy is handled--in both Japan and the United States."
Turning to his Wednesday meeting with European Bank for Reconstruction and Development President Jean Lemierre, Miyazawa said Lemierre told him that although the euro was gaining against the dollar, "the U.S. economy is strong and I don't foresee a hard landing." Miyazawa said that overall European economies were improving, unemployment was declining and that he saw this as a positive development. He denied that euro gains against the dollar represented declining trust in the United States.
The Japanese finance minister is set to discuss the outlook for European and Asian economies at the Asia-Europe Finance Ministers' meeting on Saturday and Sunday in Kobe, Japan.