Takenaka tries to ward off yen pessimism


The yen is threatening to strengthen past the 119 barrier on Monday in Asia, after ending Friday trade at 120.33 in New York

staff and wire reports

TOKYO, Japan -- Heizo Takenaka, Japan's economics minister, is attempting to ward off pessimism over the yen's strength against the dollar.

"The yen rise right now is part of a broad decline in the dollar," he said on Sunday on NHK, Japan's national broadcaster.

"The yen has not risen that much against other currencies," he added.

The minister stated that pessimism over the currency was as negative to the economy as being overly confident.

Japan will act against excessive yen

Japan's wholesale prices remain steady, fresh data showed on Monday. But they could still face pressure from the yen's run against the buck (full story).

That suggests deflation will worsen as a result of the yen. The Japanese currency has strengthened below 120 again, standing at 119.28 against the dollar in morning trade out of Hong Kong.

Haruhiko Kuroda, the official who overseas foreign affairs for the finance ministry, said on Monday that Japan would act again on its currency if necessary.

"There has been no change in our policy that we will take firm steps against an excessively strong yen if needed," he told reporters.

The central Bank of Japan (BOJ) has intervened repeatedly to weaken its currency against the dollar. Japan fears a strong yen will dent an export-driven recovery that appears to have taken hold.

U.S. economy stronger than suggested

The BOJ last intervened on June 28, calling on help from the U.S. Federal Reserve and the European Central Bank, according to Reuters news agency.

Takenaka said the U.S. economy was much stronger than its shaky stock markets suggest. Second-quarter figures will filter through this week, and investors will be watching for a break after five quarters of slumping profits (full story).

Japan's stock market opened higher on Monday, with the Nikkei index bursting above the 11,000 barrier (full story).

In the television interview, Takenaka said the Financial Services Agency may still press ahead with a controversial plan to scrap a government guarantee on ordinary deposits next April.

The government already elected not renew a guarantee of some deposits this April. Takenaka said the FSA will make a decision soon on whether to scrap the guarantee next year.