(FT) -- Tokyo intervened in the currency markets for the first time in more than six years to weaken the yen, after the currency broke through Y83 against the U.S. dollar and threatened exporter profits and business sentiment.
The unilateral intervention on Wednesday morning sent the yen down as much as Y1 within an hour and gave the Nikkei 225 and its exporter constituents a boost. However, the action came at a sensitive time that could cloud the debate over China's control over the renminbi.
Yoshihiko Noda, the finance minister, told reporters that the yen's sharp gains from Tuesday -- following Prime Minister Naoto Kan's victory in his Democratic party's leadership battle -- were "a problem that could not be overlooked," given that the Japanese economy has suffered some difficulties, including its ongoing struggles with deflation.
"In order to restrain excessive moves in the currency market, we earlier carried out currency intervention," Mr Noda said. He added that he was prepared to take further action, including further intervention, if necessary and that overseas authorities had been contacted.
Yen intervention remains a political matter over and above an economic one, and the decision for the government to intervene gives Mr. Kan the opportunity to show leadership, according to traders and analysts. A trader said that the lull after Tuesday's DPJ vote gave the authorities a chance to catch the market by surprise.
CNN
