Japan’s minister spoke not to rule out any measures to fight against strong yen

Monday, October 31, 2011  11:25

The dollar fell to a new post-World War II low of 75.73JPY/USD overnight and stopped at 75.74JPY/USD in the morning of October 31^st 2011, hitting a fresh high over US dollars as growing worries over the ability of Europeans leaders to solve their debt, the weak US economy and banking woes drove investors to seek refuge in what they perceive to be safe investments, including the yen.

In order to take action against currency's record-busting rise threatens to further damage the country's already moderating economic recovery after the 3.11 earthquake and tsunami, in the morning of 26^th October, Mr. Jun Azumi, Japan’s Finance Minister spoke that “We will not rule out any possible measures to deal with this issue” and he also emphasized that “I have just instructed the ministry staffers again to make preparations so that we can take immediate action in response to any coming changes.”

The bank of Japan was called on to play a part in helping to weaken the currency through further monetary easing in a timely manner. If the bank were to take action, the most likely measure would be its primary weapon for credit easing by increasing the amount of its asset-purchase program from the current 50 trillion yen.

Strong Yen and its keeping rising are undermining the international competitiveness of Japan exports at a time when a global slowdown has been beginning to weigh more on the nation’s economy, especially which needs a boost from export sector to help recover from the 3.11 earthquake and tsunami. As a measure to prevent the strong yen from eroding their profits, Japanese manufacturers may shift more of production abroad which may lead to high unemployment and hinder the nation’s economic recovery as a result.

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