Japan drives down yen as crisis grips world financial markets

Bank of Japan sells more than one trillion yen to stem currency’s value Japan has followed in Switzerland’s footsteps and intervened to stem the strength of its currency, which has been boosted by investors seeking safe-haven investments. The Bank of Japan had spent more than one trillion yen (£7.7bn) before the close of trading in Tokyo on Thursday, according to local reports, in an effort to drive down the value of the yen. It sold yen heavily on the foreign exchanges, and also eased monetary policy by expanding its asset purchasing scheme and offering more cheap loans to financial firms to encourage them to keep lending. The latest move in the crisis that is gripping the financial markets came as shares in London and Europe were expected to rebound, following Wednesday’s widespread heavy losses . Financial spreadbetters expect the FTSE 100 index in London to open some 30 points higher, while Germany’s Dax is seen opening 70 points higher and France’s CAC up 40 points. The intervention came after days of official warnings that the yen had risen so much that it threatened to derail Japan’s recovery from the devastating tsunami and earthquake in March. On Wednesday, Swiss authorities moved to stem what the national bank called the “massive overvaluation” of the Swiss franc. The Swiss National Bank announced a surprise interest rate cut to ease buying pressure on its currency. Japan’s intervention pushed the yen beyond a two-week low of 79 yen, from 77.10 yen. Finance minister Yoshihiko Noda said Japan had consulted its international partners but acted on its own. “Japan is just in the process of recovering from a natural disaster so these currency moves are certain to have a negative impact on the economy and financial markets,” he said. Global economy Japan Economics Julia Kollewe guardian.co.uk

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