UPDATE 1-Japan finmin intervention talk sparks yen fall, Nikkei rally
* Japan must be ready to counter one-sided FX moves-Aso
* FX a transmission channel, not goal, of easy policy-BOJ
* Aso's comments weaken yen, bolster Nikkei shares
By Leika Kihara
TOKYO, Nov 14 (Reuters) - Finance Minister Taro Aso sparked a bout of yen selling that pushed the dollar near a two-month high and bolstered Tokyo shares when he told a parliamentary committee that Japan must retain currency intervention as a policy tool.
A senior Bank of Japan official said it was a common understanding among major advanced nations that the objective of monetary policy is to stabilise prices, not influence foreign exchange moves.
"The currency market of course is an important transmission channel for monetary policy. But monetary policy doesn't directly aim at controlling exchange rates," BOJ Executive Director Masayoshi Amamiya told the parliamentary committee on Thursday.
Finance Minister Taro Aso told the same committee that Japan no longer faces criticism from other major economies that its "Abenomics" stimulus policies are aimed at intentionally weakening the yen, giving exporters a trading advantage.
He added that as with any other country, Japan needed to ensure it retains currency intervention as a policy tool and be ready to take action when markets are excessively volatile.
"When there's one-sided yen weakness or excessive yen rises, we need to send a clear signal to markets to stop such one-sided moves," Aso said.
"The public will suffer unless policymakers have the necessary means to counter speculators that aim for short-term profits," he said.
The remarks sent the dollar as high as 99.735 yen, not far from a two-month high of 99.80 yen touched on Tuesday. The yen's decline helped pushed up Tokyo's Nikkei share average almost 3 percent to a near six-month high.
Aso and Amamiya, a top BOJ bureaucrat overseeing monetary policy affairs, made the remarks in response to a question by an opposition party lawmaker on how the government plans to manage Japan's huge foreign reserves.
Japan last intervened heavily in the currency market in late 2011 to stem sharp yen rises and soften the blow on the export-reliant economy, which was reeling from a devastating earthquake and tsunami in March.
- Malaysia air probe finds scant evidence of attack: sources |
- Search widened as Malaysia air probe finds scant evidence of attack |
- Exclusive: Chinese raw materials also found on U.S. B-1 bomber, F-16 jets
- Confrontation in Ukraine as diplomacy stalls |
- Freescale loss in Malaysia tragedy leads to travel policy questions