* Japan finance minister warns dollar/yen moves speculative
* Says has instructed MOF staff to prepare for action
* Analysts do not rule out more FX intervention
* Exports beat expectations but outlook is in doubt
By Stanley White and Kaori Kaneko
TOKYO, Oct 24 Japan's finance minister put
traders on alert for possible currency intervention on Monday as
the yen's rise to a record high against the dollar threatened to
further squeeze exporters' profits and hold back economic
Japan's export growth showed signs of resilience, slowing
less than expected in September, finance ministry data showed,
but economists warn that persistent yen strength and Europe's
sovereign debt woes pose increasing risks to external demand.
The Bank of Japan, which meets on Thursday, will probably
cut its economic forecasts because of slowing global growth but
keep monetary policy unchanged unless disappointment over
Europe's plans to solve its crisis roils markets.
Even if the BOJ keeps policy unchanged this week, Japan's
government and central bank may not be able to hold off from
taking action much longer as safe-haven flows keep the yen
stubbornly high against the U.S. currency.
"The dollar/yen rate fell sharply, to between 75 and 76 yen,
in a short time. This is an utterly speculative move and not
reflecting the economic fundamentals at all. This is
regrettable," Finance Minister Jun Azumi told reporters.
"If this move becomes excessive, we have to take decisive
action. I already instructed my staff on Saturday to be prepared
to take action."
Azumi added that the strong yen would have a major impact on
Japan's export sector, especially the auto industry, and could
dent the country's economic recovery from a slump triggered by
the March 11 earthquake and tsunami.
Azumi spoke after the dollar hit a record low of 75.78 yen
on trading platform EBS on Friday. That surpassed its
previous record low of 75.94 yen in August and brought back into
focus the possibility of intervention to weaken the Japanese
The dollar rose slightly after Azumi's remark but later
ceded ground to trade around 76.25 yen.
Japan's biggest business lobby echoed Azumi's concern about
exports and on Monday urged intervention by the authorities even
if they have to go it alone.
"I would like to see firm action by Japan, including steps
such as intervention on its own," Nippon Keidanren Chairman
Hiromasa Yonekura said at a news conference.
Analysts do not rule out intervention, most likely
unilateral, if the yen continues to rise.
"Japan may intervene in the currency market if dollar/yen
stays below 76 or falls below 75. Unless it intervenes, the yen
may continue to rise and verbal warnings alone may not be able
to reverse that trend," said Yoshiki Shinke, chief economist at
Dai-ichi Life Research Institute.
Traders in Tokyo, however, were sceptical whether the latest
market action would serve as a trigger for intervention, citing
a broad sell-off in the dollar as the main driver and data
showing that margin traders have recently built up long
Since September of last year, the government has intervened
twice on its own and once jointly with other Group of Seven rich
nations to weaken the yen, but the effects of intervention have
The government needs to be ready to respond if the pace of
speculative currency move picks up, Vice Finance Minister
Fumihiko Igarashi warned.
Japan's exports rose 2.4 percent in September from a year
earlier, boosted by shipments of cars and car parts. That
compared with a median forecast for a 1.0 percent increase, and
followed a 2.8 percent climb in the year to August.
Imports increased 12.1 percent in September, against a
forecast of a 12.6 percent rise.
The trade balance turned to a surplus of 300.4 billion yen
($3.95 billion) following the previous month's deficit. That
compared with a median forecast of a 198.8 billion yen surplus.
Exports to Asia, which account for more than half of Japan's
total exports, edged up 0.2 percent from a year earlier, with
China taking in 2.7 percent more Japanese goods than a year ago,
while exports to the United States were up 0.4 percent.
The Japanese economy probably rebounded in the third quarter
from the damage caused by the March 11 disaster but is expected
to slow to a crawl in the final quarter due to an intensifying
euro-zone debt crisis that threatens to drag down the world
economy, a Reuters poll shows.
Euro zone leaders are striving to agree on new steps to
reduce Greece's debt, strengthen the capital of banks with
exposure to troubled euro zone sovereigns and leverage the euro
zone's rescue fund to stem contagion to bigger economies.