January 7, 2010 / 8:06 AM / 10 years ago

FOREX-Yen slides after Kan says wants it to weaken

* New Japan finmin says wants yen to weaken more

* Dollar jumps around 70 pips vs yen to day’s high

By Kaori Kaneko

TOKYO, Jan 7 (Reuters) - The yen slid against the dollar on Thursday after new Japanese Finance Minister Naoto Kan said he wanted it to weaken more, stirring talk that the country may be more inclined to intervene to stem any sharp rise in the yen.

Kan added that he would work with the Bank of Japan to bring the yen to an appropriate level given the currency’s impact on the economy, adding that many Japanese firms were in favour of the dollar being at levels around 95 yen. [ID:nTKF106786]

“The chances of intervention in cases where the yen truly rises has increased considerably compared to when (Hirohisa) Fujii was finance minister,” said Masafumi Yamamoto, chief foreign exchange strategist, Japan for Barclays Capital.

The dollar surged to as high as 92.87 yen JPY= on trading platform EBS, up from around 92.20 yen ahead of Kan's comments.

Japan has not intervened in currency markets since 2004. Kan’s comments were in stark contrast to remarks by his predecessor Hirohisa Fujii, who had given an impression that he was willing to tolerate a stronger yen.

“His comments were too direct and show he is unfamiliar with dialogue with the market,” said a strategist at a Japanese bank said, referring to the new finance minister.

“Also, it is clear that he is less tolerant of the yen appreciating ... I doubt if Japan will intervene in the market anytime soon unless the yen firms beyond 85 yen,” the strategist said.

The euro was 0.2 percent higher against the yen on the day at 133.31 yen EURJPY=R, having climbed from the day’s low near 132.40 yen hit shortly before Kan’s remarks.

Against the dollar, the euro was 0.2 percent lower at $1.4386 EUR=. (Additional reporting by Masayuki Kitano and Satomi Noguchi; Editing by Joseph Radford)

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