Newly appointed Finance Minister Naoto Kan smiles upon his first arrival at the Finance Ministry in Tokyo, Japan, Thursday, Jan. 7, 2010, shortly after taking over the post from his 77-year-old predecessor Hirohisa Fujii who resigned due to his health problem. Kan, 63, welcomed the yen's recent retreat from the 14-year high of 84.83 against the dollar hit in November but indicated it hadn't fallen far enough. "I hope currency markets correct themselves further, weakening the yen," he said.
His predecessor, Hirohisa Fujii, who stepped down for health reasons, was criticised for tolerating a strong yen, which hurts Japan's exporters.
Japan is currently battling the threat of deflation and a large public debt.
Mr Kan said he would seek to work with Japan's central bank on the issue, prompting speculation that he might order official intervention.
"I will deal with it seriously and work hard to bring it to the appropriate level, considering the impact that foreign exchange has on the Japanese economy," Mr Kan told reporters.
An appropriate level would be about 95 yen to one US dollar, he said, making a rare public comment by a government minister on the currency's desired value.
The yen dropped against the dollar on foreign exchange markets to 92.8 following his remarks, from 92.2 before he spoke.
The yen has dropped steadily since reaching a 14-year high against the dollar of 85 in November.
Japan has not intervened in the currency market for several years and Mr Kan's predecessor, Mr Fujii, had spoken against weakening the yen to help exporters.
Mr Kan was appointed to the post on Wednesday, after Prime Minister Yukio Hatoyama reluctantly accepted Mr Fujii's resignation.
Mr Fujii, 77, has been treated in hospital for high blood pressure.
He had told reporters he was exhausted after weeks of wrangling within Japan's governing coalition to finalise the budget.
The change of faces in such a key post is being seen as a severe test for Mr Hatoyama - who came into power in September after nearly 50 years of conservative rule and is already suffering from falling ratings.
Mr Fujii's departure has added to uncertainty about the new government's ability to handle the economy.
Parliament reconvenes the week after next with the budget at the top of the agenda.
Double dip risk
Mr Kan has headed a national strategy unit that sets fiscal priorities but he has nothing like the budgetary experience of Mr Fujii, says the BBC's Roland Buerk in Tokyo.
The question for bond markets is whether he will be able to resist pressure for more government spending, especially if Japan's economy sags towards a double dip recession, our correspondent says.
The 63-year-old Mr Kan's previous experience in government is as a health minister in the mid-1990s. He is also currently the deputy prime minister.
Analysts are questioning whether he will be able to stem Japan's deflation and massive government debt.
The world's second largest economy is currently recovering from its worst recession in decades, with 
public debts worth about 200% of annual economic output.
ANALYSIS
Roland Buerk, BBC News, Japan
*Japan's recovery is frail, made vulnerable by worsening deflation.
*Exporters, still suffering a hangover from the global recession, are being laid low by the strong yen.
*There are fears in government of a possible return to recession, which it cannot afford as it faces upper house elections in July.
*The other big issue is the national debt.
No comments:
Post a Comment