Japan to Act on Dollar’s Excessive Fall Against Yen

Japanese Finance Minister Noboru Takeshita said today that the U.S. dollar’s decline against the Japanese yen is excessive and that Japan will intervene “as necessary” in support of the U.S. currency.

Takeshita spoke at a news conference after the dollar set its eighth post-World War II record low against the yen in 14 Tokyo trading days, closing at 160.20 yen, down 2.65 yen from Friday’s closing. The dollar has lost 15.65 yen in those 14 days.

He did not specify at what level the Japanese government hoped to hold the dollar-yen exchange rate, but described the current level as “not desirable.”

Takeshita said “a stable market is the most important thing of all,” and that he was considering “all possibilities” to realize that.

He did not elaborate on “all possibilities,” but indicated that policy adjustments among major industrial nations, including the United States, were necessary to achieve stability in dollar-yen dealings.

Foreign exchange traders in Tokyo have attributed the dollar’s continued fall to speculative selling and the lack of a concrete agreement by participants in the May 4-6 Tokyo summit of seven industrial democracies on cooperative action to halt the decline.

Without such agreement, they have said, intervention by the Bank of Japan alone has not been effective in helping the dollar.

Japanese government officials have expressed concern about the effect of the yen’s rapid rise on Japanese industries that depend heavily on exports. The higher yen makes Japanese goods more expensive abroad.

The dollar has fallen more than 30% against the yen since last September, when monetary authorities of five major industrial nations agreed to cooperate for a lower dollar to help ease U.S. trade deficit problems.