Yen strength forces officials to cut vacation

TOKYO, Japan -- The yen's recent strength against the dollar forced Japan's currency officials to cut short their summer vacation and show up at the Finance Ministry on Friday.

That prompted a warning over recent "excessive" currency moves.

After hitting two-months highs recently, the yen had weakened slightly Friday to 120.45 to the greenback.

That was giving markets a little relief. But it didn't help Japanese officials, who had to rush back to the office to address the currency's recent rise.

The officials, including Vice Finance Minister for International Affairs Haruhiko Kuroda, were to be on vacation until late next week.

Speculation at fault for "excessive" moves

They cut short their break to huddle. The yen's rise could exacerbate an already fragile Japanese economy.

Kuroda was not immediately available for comment but Zembei Mizoguchi, head of the ministry's international finance bureau, told reporters earlier that the volatility was undesirable.

"Recent currency moves are rather speculative and excessive," he said. The yen rose more than 3 percent against the dollar in just two days earlier this week, hitting 2 month peaks beyond the psychologically important 120 level.

Many Asian currencies have strengthened as the dollar gets beaten down on worries over the U.S. economy.

Japanese officials say the yen's rise stems from speculation, not the currency itself.

"The very rapid movement of the currency markets for the past couple of days occurred without any real development in economic fundamentals. Therefore, I regard this movement as very much speculative," Kohei Nakahira, former vice finance minister for international affairs, told Reuters.

"I think it is time for monetary authorities to give a clear message that this is speculative and it is not favorable for economic management," Nakahira said.

The Bank of Japan this week eased monetary policy. But a rise in the yen could easily offset those effects.

Japan escaped a recession on a technicality Thursday, when a revision moved its first-quarter growth figures to a slight rise, from a decrease.

Officials have admitted the next set of gross domestic product figures will be ugly when they come out in September.

Though Japan avoided recession - two straight quarters of economic decline - economists say it only put off that inevitability until the third quarter data comes out in December.

Reuters contributed to this report.