Yen's continued run draws fire in Asia

By staff and wire reports

TOKYO, Japan -- The yen briefly touched 131.00 against the dollar on Wednesday.

That continued its three-month run of weakness, which has started to draw criticism from officials in Japan's main Asian trading partners.

The move to 131 comes a day after the Japanese currency first broke the 130 barrier.

The currency stands at its weakest level in 38 months, dating back to October 1998 and the aftermath of the Asian financial crisis.

Japanese officials have been seen as encouraging the yen's decline, with a series of comments suggesting they appreciate a weaker currency.

More kindling from finance ministry

A senior official at the finance ministry added more kindling to the fire on Wednesday.

Zembei Mizoguchi, head of the ministry's international bureau, said the yen's weakening against the dollar is warranted.

"There's no change in what I have been saying before," Mizoguchi said. "A correction of the yen's slightly excessive strength is still continuing."

Mizoguchi did say, however, that sharp moves in the currency need to be watched.

The yen has run up fairly rapidly over the last month. It was under 123 to the dollar at the start of December and was below 120 in the middle of November.

The impact on the rest of Asia has been limited. But the run has started to draw criticism from officials in some of Japan's main Asian trading partners, such as China and South Korea.

Korea views yen's run as 'worrisome'

On Wednesday, South Korea's top foreign-exchange official said he was bothered by the speed of the yen's decline.

"The yen's steep fall is worrisome," said Kim Yong-duk, deputy minister for international affairs at the Korean Finance Ministry, according to Reuters news agency. "We could take action if necessary."

In China, there's a mounting chorus of criticism of the yen's slide from state media. On Wednesday, the country's main financial newspaper ran a harangue against the currency's "irresponsible" moves.

"South Korea, Southeast Asia and other countries think this irresponsible depreciation in the yen could have a serious impact on the Asian economy," China Securities stated. "Japan ought to bear responsibility for this."

'Worse than Asian financial crisis'

The state-run People's Daily newspaper warned Monday that further drops in the value of the yen could lead to a situation even more serious than the 1997 Asian financial crisis.

"If the Japanese yen continues a long-term depreciation, it will trigger devaluations in other Asian currencies," a commentary in the newspaper ran. "Against the current background of the slowing global economy, this would incur an even more serious outcome than the Asian financial crisis."

A weaker yen makes Japanese goods cheaper overseas. But it also puts pressure on Asian competitors of Japanese companies, and makes Korean and Chinese goods more expensive in Japan.

Similar declines in the currency have drawn political pressure from Korea and China in the past.

Currencies like the Korean won and Taiwanese dollar have weakened in sympathy with the yen. China's vast foreign-currency reserves mean it's highly unlikely the yuan would be devalued.

The won stood at 1,135.8 to the dollar on Wednesday afternoon. The yen had strengthened slightly by the afternoon and was trading at 130.55.

Reuters contributed to this report.