Japan renews warning on yen, new offer to opposition

March 21, 2011 10:24 PM EDT

Japan issued a new warning on Tuesday to those in markets who might try to drive the yen higher, with Finance Minister Yoshihiko Noda saying officials were closely watching currency moves and would cooperate with G7 partners again as appropriate.

Previous image Enlarge Close Next image

Share This Story

The Group of Seven rich nations intervened on Friday in a rare coordinated action to stem the yen's climb after it vaulted to a record high on speculation that a devastating March 11 earthquake and tsunami would force Japanese investors to bring money back home to finance reconstruction.

"We will cooperate as appropriate while closely watching market movements," Noda told a news conference after a cabinet meeting, adding that it was meaningful that the G7 acted in concert.

Asked about market reaction to the intervention, Noda said he would not comment on specific currency levels.

Warnings that the group was ready to strike again have kept markets on edge so far this week, with the yen hovering around 81.2 per dollar early on Tuesday when Japanese markets reopened after a long weekend.

Must Read

Sponsorship Link

Follow us

Speaking separately, Economics Minister Kaoru Yosano renewed Prime Minister Naoto Kan's offer to the opposition to join the cabinet, saying a broad coalition would speed up decision making in response to the nation's worst crisis since World War Two.

Kan suggested last week that the government could be broadened to bring in opposition representatives, but the main opposition party so far has rejected the offer.

Yosano also dismissed a suggestion in a newspaper report that the government might take some of the funds earmarked in the budget for the public pension system and use them to finance disaster relief efforts.

"It is undesirable to use pension funds as a source of money for disaster relief, as it would destroy the basic principle of a pension fund," Yosano told reporters.

The government has yet to give its estimates of the damage, but Yosano told Reuters last week the total impact could exceed 20 trillion yen ($250 billion), making the March 11 quake and tsunami by far the world's costliest natural disaster.

It looks certain that Tokyo will need additional emergency budgets worth several trillions of yen, but Kan said it was too early to estimate the size of such budgets and the government was not yet at a stage of discussing revenue sources.