Japan stands firm on currency intervention ahead of G-7 meet

Written by Reuters | Tokyo | Updated: Oct 10 2010, 04:46am hrs
Japan said it will continue to intervene to curb a strong yen if necessary, just hours before G-7 and IMF officials meet to discuss escalating tension over currency policies, and Thailand is also poised to act.

China, which has rebuffed calls from the West to let its currency rise faster, allowed the yuan to firm on Friday to its highest against the dollar since a revaluation in July 2005. Traders said Beijing may be making some concessions ahead of International Monetary Fund and World Bank meetings this weekend. But they said any further rise would be limited so as not to harm its exports. With positions entrenched, expectations for any meaningful agreement in Washington are low although fears of a global currency war have jumped to the top of the agenda.

We are approaching a G-7 meeting, but regardless of this, Japan will take firm measures, including intervention, when needed, Japanese finance minister Yoshihiko Noda told reporters when asked about the yens rise to another 15-year high on Thursday. This is Japans basic stance.

Japan, worried a strong yen would hit its vital export sector, intervened in the market for the first time in six years last month, drawing criticism from its peers.

Prime Minister Naoto Kan sounded a little more conciliatory, saying Tokyo wanted to cooperate with its Group of Seven peers on currencies, but in the same breath reiterated the message that the authorities would take decisive steps if needed.

Global policymakers have been clashing over the dollars broad-based decline, with emerging economies stepping up efforts to cap their currencies, actions which developed nations argue could derail economic recovery.

Thailands finance minister will propose measures to handle the bahts strength at a cabinet meeting next week, Prime Minister Abhisit Vejjajiva said on Friday. The baht, which has risen about 11% against the dollar this year, the second-best performer in Asia after the yen, slipped after the comments. Russian deputy finance minister Dmitry Pankin said Brazil, China, India and Russiathe so-called BRICssee the current moves in emerging markets currencies as a deeper problem that cannot be solved through a free float.Free float is not an exit prescription, its not a prescription for all illnesses, he told reporters after a meeting of deputy finance ministers in Washington on Thursday.

Chinese premier Wen Jiabao, in Europe this week, politely rejected calls to let the yuan appreciate faster and Brazil on Monday doubled a tax on foreign investors buying local bonds, trying to curb a currency rally.