Noda Says `Difficult' for Japan to Win Coordination on Yen Intervention

By Keiko Ujikane - Sep 4, 2010 12:20 PM GMT+0500

Japanese Finance Minister Yoshihiko Noda said it would be “difficult” to gain support for international coordination to halt the yen’s gains, signalling any sales of the nation’s currency would have to be unilateral.

“This is about what options we have on the assumption coordination would be difficult,” Noda said on a TV Tokyo program today. “Our statements on taking ‘bold action when necessary’ cover everything.”

The yen’s advance to a 15-year high against the dollar threatens earnings at companies from Sony Corp. to Toyota Motor Corp. Sony Chief Executive Officer Howard Stringer said this week that the currency’s appreciation is a “huge handicap for us.” About half of Japan’s manufacturers say the yen’s recent gains are hurting their sales, according to a survey published yesterday by credit research agency Teikoku Data Ltd.

The currency’s advance, which threatens to stunt Japan’s trade-dependent economic recovery, has featured in Prime Minister Naoto Kan’s battle to fend off a challenge to his leadership of the ruling Democratic Party of Japan.

Ichiro Ozawa, former deputy leader of the DPJ and Kan’s opponent in party contest, said this week he would take “every measure,” including intervention, to keep the yen from rising. Kan said last week the government is “ready when necessary to take bold measures” in the currency market.

‘A Matter of Deciding’

“What they meant was the same,” Noda said today. “Ultimately, it’s a matter of deciding whether or not to intervene.”

Japan hasn’t stepped into the foreign-exchange market since 2004, when the yen was around 109 per dollar, and may not succeed in curbing the yen’s gains on its own.

While coordinated intervention helped set a floor for the euro in 2000 and the dollar in 1995, solo sales of yen in 2003 and early 2004 failed to arrest the advance.

Developed economies abroad are weaker than when Japan last intervened, and are themselves looking to boost exports, making it tougher for Japan to go it alone.

Japan views probable U.S. opposition to currency intervention as an obstacle to selling the yen, according to three Japanese government officials.

Sales without U.S. backing would be a challenge, the officials said on condition of anonymity because the government discussions are private.

Two of them also said volatility, rather than the current level, would be a more likely trigger for an end to the policy of refraining from sales of the currency, which last week hit a 15-year high at 83.60 against the dollar.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net