Yen Down on Intervention Concerns

The Japanese yen posted its first daily drop against the U.S. dollar after 5 days of gains as the Japan’s Finance Minister said that the currency intervention will be used if needed to keep the yen from the excessive appreciating.
Finance Minister Shōichi Nakagawa said today that the Bank of Japan will use the currency intervention for the first time in the last four years to protect the exporters if such means will be required. During the intervention the central bank sell the yen and buys the dollars out of the market to weaken the yen against the U.S. dollar, thus helping the domestic industry.
The yen appreciates against the dollar since August this year and it reached its new 13-year minimum yesterday. The  U. S. Federal Reserve cut the interest rate below the Japan’s level making the dollar a less desired currency and opening a new possibility for the yen to continue strengthening.
Other Japanese officials believe that the intervention is a needed step and also a very probable one considering the recent currency gains and the ongoing global recession. Currency analysts expect some unpredicted volatility if the Bank of Japan uses the currency intervention without a proper announcement.
USD/JPY rose from 87.34 to 87.81 as of 8:30 GMT today with a daily maximum at 88.28. EUR/JPY rose from 125.80 to 126.87 after reaching its daily high at 127.40 — its peak since November 10. NZD/JPY went up from 51.74 to 52.46 today.

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