Japan denies cap on yen moves


The yen has lost 15 percent of its value this year, but officials deny they have set a limit of 140 to the dollar

By staff and wire reports

TOKYO, Japan -- A senior Ministry of Finance official denied Monday that Japan has set a target for the value of its currency.

He was responding to a report in the Mainichi Shimbun stating that Japanese officials were willing to see the yen rise to 140 against the dollar.

"It is absolutely not true that we have such a target," a ministry official told Reuters news agency.

The Japanese newspaper stated that the Finance Ministry had cooperated with the central Bank of Japan to set a level of 120 to 140 yen as "the appropriate level" for the currency.

They would intervene if the yen traded out of that range, the paper stated, citing unnamed market sources. They would buy yen if it rose above 140 to the dollar, the report said.

Yen slightly stronger on Monday

The yen was slightly stronger Monday afternoon, trading at 131.26 to the dollar after rising as high as 131.53.

But it set a three-year weak level against the American currency last week, hitting 132 last Thursday.

The yen has lost close to 15 percent of its value this year. It was trading at 114.45 to the dollar at the start of 2001.

Finance ministry officials have encouraged the currency's decline against the dollar, with a series of comments suggesting they are taking a hands-off approach over its weakening.

That sparked off criticism from officials in South Korea and China, the two Asian countries that do the most trade with Japan.

A weaker yen makes Japanese goods cheaper overseas, as well as boosting the profits of Japanese exporters when they translate overseas sales back into yen. But it makes life tough for companies in Korea and China that compete with Japanese peers.

The Singapore and Taiwanese dollars and the Thai baht have also been suffering from the yen's decline.

But the root cause of the yen's decline is persistent worry over the shape of the Japanese economy. The country's high level of public debt and the large amount of bad loans facing the banking system are persistent worries.

Collapses like that of construction company Aoki Corp., which filed for court protection from creditors in early December, gave traders new emphasis to sell the yen this month. So far, officials have not stepped in to stem the slide.