Japan will not hesitate to respond to speculative currency moves to shield exporters from a strong yen, its finance minister said on Friday, as he expressed frustration with European inaction on containing its debt crisis. Unless European leaders detail how they will limit their sovereign debt woes, which started two years ago, it will be difficult for turbulence in markets to subside, Jun Azumi said.
The yen has largely held steady versus the dollar after Japan intervened and sold its currency last month, but a sudden spike higher could fray the nerves of policymakers trying to steer the economy towards recovery following a large natural disaster in March.
"It's really a shame because Europe's problems have started to intensify just when we were starting to see some bright signs on Japan's horizon," Azumi said. "They've been holding a lot of summits, but I don't think market trends will change unless they detail what each country will contribute to build a firewall around this crisis."
Japan sold a record of nearly $100 billion worth of yen on October 31 after its currency hit a record high of 75.31 per dollar to rein in its high-flying currency and protect exporters. The move has largely kept the yen from rising further, but a sharp decline in Japan's exports has show that Europe's debt crisis is hurting external demand, a very worrying sign for Japan's export-focused economy. Azumi said the government has made no decision on whether to compile a fourth extra budget to provide debt relief for households and businesses affected by the March 11 earthquake, tsunami and nuclear disaster.
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