In late March, we warned that a strong yen would not be tolerated.
And today, Japan issued a fresh warning over the yen’s rise after the currency strengthened to a four-month high.
The finance ministry calls recent moves in the currency “one-sided”, while Japan’s top government spokesman says the gains are “undesirable.”
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Japanese Chief Cabinet Secretary Yukio Edano says, “Our position is that rapid moves, that do not reflect the underlying situation, are undesirable. We intend to continue watching the market.”
But at this point, few in the market expect Tokyo to intervene as share prices are holding up, and the economy is recovering from the March 11 earthquake.
The yen’s strength this time is also due to global factors like the eurozone crisis, and disappointing U.S. jobs figures last Friday.
It surged into the 78-yen range to the dollar at one point on Wednesday.
Japanese policymakers are sensitive to a higher yen, as it’s seen as harmful to the country’s export-led economy.
The yen last rose to these levels in March, days after Japan’s massive earthquake. The disaster led to the yen spiking to a record 76.25 to the dollar, prompting joint intervention by the Group of Seven nations.
Bottom line: The Japanese government is on watch for rapid currency movements, as the yen surges to a four-month high on eurozone worries.