By TAKASHI MOCHIZUKI
From WSJ
TOKYO—After keeping the market waiting for more than a week, the Japanese government appeared to launch a new foreign-exchange intervention on Monday, traders said, moving to cap a continued rise in the yen that is undermining the economy and dragging down the key export sector.
A salesclerk counts Japanese yen bank notes.
It was the first time since Aug. 4 that Japan has stepped into the market to weaken the yen.
The apparent intervention came after the dollar fell to a post-World War II record low of ¥75.31 in early Asian trading.
Japanese government officials and corporate leaders have repeatedly expressed deep concern about the yen's strength and the damage it could do to the economy by hurting exporters and intensifying deflation. The government recently implemented a series of measures aimed at mitigating the effect of the yen's rise, but large exporters have piled pressure on Tokyo to do more to weaken the currency.
Finance Minister Jun Azumi has repeatedly said that Tokyo would take "decisive steps" when necessary against the strong yen. He has blamed speculators for the rise in the yen, which he said did not reflect the fundamentals of the slow-growth Japanese economy.
The Bank of Japan moved Thursday to help weaken the currency, adding ¥5 trillion to its asset purchase program of ¥50 trillion. BOJ Gov. Masaaki Shirakawa specifically cited the yen's strength as one reason for the move. Adding more money to the economy helps to lower the value of the currency.
At a highly anticipated summit of EU leaders on Wednesday, agreement was reached on private-sector writeoffs of 50% for holders of Greek debt, as well as on bolstering the euro zone's bailout fund.
Japanese officials had hoped that an agreement on the European problems will help stop money flowing into Japan, seen as a "safe haven" in times of global economic uncertainty.
Despite the extra cash from the central bank and progress in Brussels, the yen has remained strong, apparently prompting the Ministry of Finance to act on its long threatened yen-selling in the market.
It is unclear whether this latest intervention will be able to reverse the yen's rise, given the short-term impact of the last one.
The Japanese government spent ¥4.5 trillion, about $59 billion at current rates, in the August intervention to try to push the dollar up. It was the country's biggest single-day action ever and quickly sent the dollar some three yen higher. But the gains proved to be short-lived and the U.S. currency quickly fell back below the intervention level of around ¥77.10 and soon hit another record low.
The government's plan to deal with the strong yen is aimed at helping smaller companies hit by the currency's strength and increases the funding available to finance any intervention to ¥46 trillion ($603 billion) from ¥31 trillion.
While the government is under domestic pressure to act, officials have acknowledged that intervention wouldn't be seen favorably by major trading partners in Europe and elsewhere.
In addition, the U.S. and other countries are pressuring China to allow greater flexibility in the value of the yuan, an effort that could be undercut if Japan is perceived to be regulating its currency.
The issue of China's currency management is expected to be a leading topic at this week's meeting of G-20 leaders in Cannes, France.
Japanese officials have argued that their actions are different than those taken by other countries, with only infrequent intervention aimed at smoothing out sharp market moves, rather than at reversing the yen's rising trend.
Monday's action was the fourth time in slightly over a year that Japan has intervened to cap the yen. It followed a one-day move last September, joint intervention with other Group of Seven nations after the quake in March, and the August intervention.
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