To act firmly on FX but not in Swiss way - Japan's Azumi

By Tetsushi Kajimoto

TOKYO | Wed Jan 18, 2012 7:09am GMT

TOKYO (Reuters) - Finance Minister Jun Azumi warned against pushing the yen up too sharply against the dollar and the euro on Wednesday, signalling his readiness to step into the market to counter excess speculation, though he said Japan could not intervene in the same way that Switzerland has done.

Japanese policymakers worry that Europe's sovereign debt crisis may further boost the appeal of the yen as a safe-haven investment and derail Japan's recovery from last year's earthquake and tsunami by depressing demand for Japanese goods.

"We will always take decisive measures against excessively speculative moves," Azumi said at the Foreign Correspondents' Club of Japan.

Asked whether Japan would intervene in the currency market by setting an upper limit on its currency, as Switzerland did last year, Azumi said it would be difficult for Japan to follow suit given the vast supply of the yen in global markets.

"It would be difficult for Japan to set a certain line and constantly intervene like the Swiss," Azumi said.

"From the standpoint that the Japanese yen is basically the third key currency after the dollar and the euro, we cannot go as far as the Swiss have done," he said.

Azumi reiterated his concern about the potential impact on Japan's economy from U.S. sanctions on Iran, and said the government would negotiate with the United States to limit the impact.

"The damage would be quite tremendous if sanctions were implemented immediately," Azumi said.

Azumi also said that Japanese government bonds were being digested stably and yields were low, but that the government must demonstrate a strong commitment to fiscal discipline to win market confidence.

(Reporting by Tetsushi Kajimoto; Editing by Chris Gallagher)

Source: http://uk.reuters.com/article/2012/01/18/uk-japan-economy-azumi-idUKTRE80H0DS20120118?feedType=RSS&feedName=topNews

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