The Japanese government needs to do more to stem the yen’s rise to protect the nation’s export-driven economy as manufacturers increasingly shift production overseas, Sharp’s president said yesterday.
Mikio Katayama, who heads the Japanese electronics company, said keeping all production in Japan was growing too risky, and it was moving some flat-panel TV production to China, with a plant in Nanjing set to be running by next year.
Speaking to reporters at a Tokyo hotel, Katayama expressed frustration over the surging yen, coming at a time when Sharp’s production of liquid crystal displays had been finally recovering from the battering it took a year earlier from the global recession.
The Bank of Japan (BOJ) intervened in currency markets on Wednesday to prop up the dollar, its first intervention in six years following the yen’s climb to 15-year highs.
“It’s still not good,” Katayama said of the dollar recovering to ¥85 levels over the past two days. “Efforts must be kept up diligently.”
The Japanese currency has risen about 10 percent against the dollar this year, eroding the value of exporters’ overseas income when repatriated and making Japanese products less competitive abroad.
Katayama said prospects for Japanese companies were extremely negative with the strong yen while also facing competition from China, which tightly controls its currency.
Japanese Finance Minister Yoshihiko Noda also repeated his threat to intervene in currency markets if necessary to weaken the yen, illustrating government resolve in the face of overseas criticism.
“As we have been saying, our basic stance is that we will take decisive steps, including intervention, if necessary, and I’d like to maintain this stance,” he told a news conference after a Cabinet meeting.
However, any repeat foray into the markets if the yen resumes upward moves may provoke ire from Japan’s G7 partners, after its unilateral intervention on Wednesday was rounded on in Washington and Brussels.
Luxembourg Prime Minister Jean-Claude Juncker hit out at such action on currency markets on Thursda, saying his eurozone partners “don’t like unilateral intervention.”
Juncker, who heads the Eurogroup of finance ministers who manage the shared currency, spoke out as US Treasury Secretary Timothy Geithner bluntly warned China it had to let the yuan rise against the dollar to end trade distortions.
Earlier, US Democratic Representative Sander Levin, who chairs the House of Representatives’ Ways and Means Committee that has power over taxes and trade policy, called Japan’s policy “predatory” and “deeply disturbing.”
Noda said he was “checking” the overseas response to the intervention, adding, “I understand there are various opinions.”
The yen was at ¥85.72 against the US dollar yesterday, nearly ¥3 off a 15-year high of ¥82.86 reached before the BOJ’s intervention.
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