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Japan weakens yen to aid recovery, exports
Puts more cash into struggling economy, calls for global action
TOKYO — Japan's government called for global action to calm currency markets Thursday as it took bold measures to help Japanese companies trying to recover from the March 11 disasters and a rising yen.
The Finance Ministry said it took the drastic measure of intervening in currency markets in order to weaken the yen, which has risen in value by 5 percent in the past month amid investor concerns over skyrocketing debt in Europe and the United States.
A high-value yen makes Japanese exports more costly for foreign importers, decreasing demand for Japanese goods.
In a coordinated move, the Bank of Japan increased its purchase of bonds and other assets to put more cash into the country’s struggling economy.
Major Japanese exporters welcomed the moves but remained cautious about whether they will do enough to weaken the yen long-term.
“It is good news, not only for Sanyo, but for other Japanese companies who export products in order to expand our businesses overseas,” Sanyo Corp. spokesman Kurato Yamada told The Washington Times. “It’s hard to say how much this will help or not because it’s just happened today.”
Sanyo, which made 60 percent of its sales outside Japan in 2010, is one of many Japanese exporters whose ability to hire workers, invest in projects, and earn profits overseas is hurt by a strong yen compared with declining currencies in the United States and Europe.
Bloomberg News reported that the 15-yen change in the currency over the past year has blown nearly $4000 in profit off the sale of a $20,000 vehicle.
Yokohama-based automaker Nissan said the strong yen pushed down its profits by 55 billion yen in the second quarter, even though its sales increased by 1.6 percent.
“The prolonged and rapid appreciation of the yen goes beyond a level that can be overcome by the efforts of a single company,” Nissan Corporate Vice President Joji Tagawa told reporters last week. “The impact will eventually spread to employment.”
“The one-sided rise of the yen could have a negative impact,” Noda told reporters in Tokyo on Thursday. “I will continue to watch the market closely and will take appropriate action. Given the current international financial situation, I would like to continue to communicate with other countries.”
Economics Minister Kaoru Yosano said world leaders should coordinate further action to stabilize currency markets.
“This is also a question of whether the yen is strong or other foreign currencies are weak, so I think G7 and G20 officials will need to thoroughly discuss currency moves from here on as a global issue.”
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