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. Last Updated: 07/27/2016

Japan Seeks Assistance To Tame Rampant Yen




TOKYO -- Finance Minister Kiichi Miyazawa stepped up his offensive to enlist help from the Bank of Japan and U.S. authorities to tame the rampant yen Friday, appearing confident that a deal was in the works.


Although coy on details, Miyazawa said the currency's recent surge had caused him to change his view, and he no longer thought that battling the currency was Japan's problem alone.


He also said for the first time that he expects to discuss the yen in Washington next week, when he will attend a meeting of the Group of Seven leading industrial nations.


The yen, which retreated more than 2 yen Friday amid talk of joint intervention, had strengthened some 13 percent since Japanese data in June began showing a revival in the world's second largest economy as money has poured into Japanese assets.


Late Friday in Tokyo it was around 106.7 to the dollar. The deal Miyazawa is pushing would likely have Washington join Japan in selling yen for dollars and the Bank of Japan would embark on further monetary easing to weaken the currency.


Given that the central bank has already pushed short-term interest rates to around zero, this would involve more arcane ways of force-feeding the banking system, such as leaving the yen it sells in the market to circulate rather than soaking them up through bond sales, a process dubbed "sterilization."


Financial daily Nihon Keizai Shimbun said just such a deal was being readied.


It reported that Washington would join Japan in large yen-selling interventions and that the BOJ would tell the G-7 it would embark on a quantitative easing.


Prime Minister Keizo Obuchi joined the fray, saying Japan must consider every step to deal with the high yen, "including cooperation with other countries." He also said he was "aware of influential opinions" favoring a further BOJ easing.


Miyazawa has sent a top deputy to see U.S. officials and has huddled twice in as many days with the central bank chief. Asked whether his deputy Haruhiko Kuroda had discussed joint currency intervention Thursday in Washington, Miyazawa said at a news conference: "No one is saying so, but I think it is possible they are discussing the issue."


Miyazawa also let drop that Hayami had telephoned William McDonough, president of the New York Federal Reserve, which conducts the Fed's currency interventions.


On further monetary policy steps by the BOJ, he said with a smile: "It's not appropriate for me to answer that right now."