- Title: JAPAN: Stocks at year's low as Japan PM, BOJ head discuss yen, economy
- Date: 24th August 2010
- Summary: TOKYO, JAPAN (AUGUST 23, 2010) (REUTERS) TOKYO STOCK EXCHANGE (TSE) BUILDING VARIOUS OF CIRCULATING ELECTRONIC STOCK BOARD VARIOUS OF TSE STAFF MONITORING TRADES TSE LOGO ON ELECTRONIC STOCK BOARD ELECTRONIC STOCK BOARD SHOWING NIKKEI AVERAGE AT 9116.69 DOWN 62.69 MORE OF ELECTRONIC STOCK BOARD
- Embargoed: 8th September 2010 13:00
- Location: Japan
- Country: Japan
- Topics: Economic News
- Reuters ID: LVABTTBP1GAJC1NFVHJ48SX7WSW6
- Story Text: With the yen hovering at 15 year highs against the U.S. dollar, markets have been rife with speculation that Japanese Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa would meet to hammer out steps to reign in the strong currency.
But instead of meeting in person, Kan and Shirakawa spoke to each other on the phone, Japanese Chief Cabinet Secretary Yoshito Sengoku told reporters on Monday (August 23).
And while Kan and Shirakawa discussed the yen, agreeing to work closely to help the economy, Kan did not ask the central bank to ease monetary policy further.
The government's chief spokesman said the two did not touch on currency intervention either, disappointing markets which had expected a bolder policy response or even a signal of one after the yen's surge to 15-year highs earlier this month.
"The Prime Minister called the Governor of BOJ this morning and exchanged views on the economic and financial situation including foreign exchange," Chief Cabinet Secretary Yoshito Sengoku told a news conference on Monday.
"They agreed that it was important for the government and the BOJ to communicate closely with each other," he added.
Sengoku added that the government wanted to consider whether Kan and Shirakawa should meet in person, although he did not give a timeframe.
The dollar edged down to 85.30 yen from around 85.45 yen after Sengoku's comments, partly on disappointment that no firm commitment to monetary easing came out of the talks.
Markets earlier thought that the BOJ may try to pre-empt government pressure for action and further loosen its already ultra-easy policy at an emergency meeting before or shortly after an expected meeting between Shirakawa and Kan.
But the BOJ is unlikely to act before its next regular policy meeting on September 6-7 unless the yen heads towards its all-time high past 80 to the dollar at a pace of 2 to 3 yen per day, sources say.
Japanese companies, meanwhile, are better placed to cope than 15 years ago, when the yen hit a record peak of 79.75 per dollar.
Japan's Nikkei average ended the day at a nine-month closing low on Monday, dented by selling from what some market players said was hedge funds and foreigners as worry lingered about the pace of economic recovery and the impact of the strong yen.
Disappointment that the long-expected meeting between Kan and Shirakawa has been replaced by a telephone talk took the market within sight of a 13-month low, but support held below 9,100.
The benchmark Nikkei shed 0.7 percent or 62.69 points to 9,116.69, its lowest close since late November, after falling as low as 9,090.96. The broader Topix lost 0.6 percent to 824.79.
The 9,000 to 9,100 area is seen as strong support after serving as support several times last year, and several attempts this month to break through on the downside to a fresh 13-month low have been checked just under 9,100.
If the Nikkei broke below 9,000 the next support would lie at 8,697, a 61.8 percent retracement of the rally between its March 2009 low and April 2010 high.
Analysts say steps to stem the yen's rise are crucial for the Nikkei. In Asian trade the dollar was lower at 85.36 yen. It hit a 15-year low of 84.72 yen this month.
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