Japan's FinMin hints at intervention to curb yen's rise

Japan's Finance Minister Taro Aso said on Friday that rapid swings in currency markets were undesirable, hinting his ministry will intervene in the market to counter the yen's rapid appreciation if necessary.

Aso's remarks made at a press briefing came as the U.S. dollar was changing hands at 112.42-44 yen in early deals in Tokyo, compared with 112.37-47 yen in New York Thursday.

Noting "wild swings" in the currency market, Aso said that such volatility is "undesirable as agreed by the Group of Seven industrialized nations."

"We will monitor the developments in the currency market carefully and will respond appropriately when necessary," Aso said, while refusing to comment directly on mounting speculation that the ministry may intervene in the currency market to halt the yen's rapid rise.

"Recent foreign exchange moves have been very rough. I am very nervously watching these moves and will take appropriate steps as necessary," the finance minister remarked.

Aso also maintained that Japan's fundamentals remain solid and that market sentiment is reacting to jitters rather than primary facts, although some economists believe that the dire situation of financial institutions in Europe, coupled with the possibility the U.S. Federal Reserve will hold off on another rate hike, corroborate a global economic downturn and possible 2008-like global market crash.

For Japan, a strong yen threatens to derail the prime minster's "Abenomics" blend of economic policies. Prime Minister Shinzo Abe's economic policy is largely based on the ongoing assumption of the yen's comparative weakness spurring exports, factory output and bolstering business spending and salaries, on accommodative lending policies.

The yen's rise of late has nullified Japan's depreciation effects of the country's policy to keep its currency weak over the past 15 months and the Bank of Japan (BOJ) Governor Haruhiko Kuroda, under fire for the limited impact the central bank adopting a negative interest rate has had, said Friday that the bank is poised to "act without hesitation to achieve rice stability."

Currency markets will remain on edge as long as the government has its finger on the trigger to foray into markets to forcibly counteract this month's 9 percent surge in the yen, which has marked its strongest gain since the 2008 global financial crisis.

The finance ministry intervened into currency markets following the 2011 earthquake and tsunami disaster, with the disaster-triggered action not receiving a backlash from the G7 nations who agree that currencies should not be unilaterally manipulated.

In October of the same year, the finance ministry is believed to have once forayed into the markets, prior to the BOJ unleashing its huge massive monetary expansion, which saw the yen fall from a record high of 75.30 against the greenback and help give the nation's battered export sector some respite and help facilitate the burgeoning costs of importing fossil fuels.

Market payers said Friday they could not rule out further currency intervention as the benchmark Nikkei average temporarily dropped below 15,000 for the first time in about 16 months on the Tokyo Stock Exchange. The benchmark Nikkei plunged more than 5 percent, as the sell-off continues on global outlook concerns and the yen's abrupt appreciation. Endit