Japan mulls measures to stem yen's surge

Nov 27, 2009

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Japan's finance minister raised the possibility of intervention to stop the soaring value of the yen from damaging exports.

Speaking as the Japanese currency hit a 14-year high against the dollar, Hirohisa Fujii said the rise of the yen is damaging the country's economy. Japan's economy is highly dependent on exports of products such as televisions and stereos to the US and other markets.

'There is no doubt that the market has moved too far in one direction,' he said.

'Moves right now are extreme, and it would be possible to take appropriate measures.'

He said he will contact US and European officials to discuss acting on currency movements if necessary.

His remarks came as Prime Minister Yukio Hatoyama raised the possibility of a 'double-dip' recession, amid fears that recent signs of economic recovery may be a false dawn.

However, opinion is divided on the actual state of the Japanese economy with observers saying government pessimism may be a tactic to push through government spending and tax rises.

Last week the government and the central bank contradicted each other, with the Bank of Japan issuing a report on the economy that was more optimistic than a cautious one issued by the government.

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