Japan's Finance Minister Is Watching Yen, Stocks Closely
Japanese Finance Minister Koji Omi said on Tuesday he would closely watch a recent rise in the yen and falling stock prices, providing a somewhat stronger statement than his mantra that markets should reflect economic fundamentals.
But Omi and other Cabinet members played down the impact of recent falls in stock prices and rises in the yen on the Japanese economy, saying economic fundamentals remain firm.
"Exchange (rates) and stock prices are decided by markets," Omi told a news conference when asked about tumbling global stocks and a recent appreciation in the Japanese currency. "I won't comment on levels, but I'd like to keep a close eye on them," he added.
Over the past several months, Omi has been mostly repeating two phrases: that currency movements should reflect economic fundamentals and that he would not comment on specific levels or movements.
Japan, which has not intervened in the currency market since March 2004, has also stressed that currency levels are decided by market forces.
Chief Cabinet Secretary Yasuhisa Shiozaki echoed Omi's comments, saying that the yen and stock prices are determined by markets, and adding that the Japanese government's job is to improve the economy's fundamentals.
The dollar rebounded from a three-month low against the yen on Tuesday as a recovery in Tokyo shares helped stem a weeklong sell-off in risky assets that was exacerbated by the Japanese currency's sharp rally.
The Nikkei 225 Average closed 1.22% higher Tuesday, giving some hope for investors that the worst of the pull-back from equities may have run its course. "Stock prices and foreign exchange basically should reflect economic fundamentals," Economics Minister Hiroko Ota told parliament. "Japan's economy is currently firm, so I'm not worried."
Omi reiterated on Tuesday that he agreed with U.S. Treasury Secretary Henry Paulson in their meeting on Monday that the fundamentals in the Japanese, U.S. and world economies as a whole are developing steadily.
Paulson, who is on a two-day visit to Japan, said during a visit to the Tokyo Stock Exchange later on Tuesday that the Japanese economy was doing well and that was very helpful for the global economic expansion.
"It is the second-largest economy in the world, and it is very meaningful to the global economic system that it's doing so well," Paulson said in brief remarks before he began a private talk with exchange President Taizo Nishimuro.