Japan Intervenes To Weaken Yen

（By Lindsay Whipp in Tokyo）

Tokyo intervened in the currency markets for the first time in more than six years to weaken the yen, after the currency broke through Y83 against the US dollar and threatened exporter profits and business sentiment.

The intervention on Wednesday morning gave the Nikkei 225 a boost, sending the stock average 1.8 per cent higher by the close of morning trading at 9,470.31, reversing an earlier 1.1 per cent decline.

Traders had been waiting to test Naoto Kan＇s resolve to stay out of the market after he won his Democratic party＇s leadership challenge from party heavyweight Ichiro Ozawa on Tuesday.

Mr Ozawa had been seen by markets as more likely to intervene to curb the rise of the yen, which had been trading at a 15-year high against the dollar and prompting complaint from the business sector.

New of Mr Kan＇s victory sent the yen as high as Y82.88 against the dollar by 10:25am on Wednesday in Tokyo. The yen then suddenly dropped 2 per cent to Y84.59 within an hour. The currency was trading at Y84.41 as of late morning.

Yoshihiko Noda, finance minister, confirmed the intervention to reporters. It was unclear whether the action was taken unilaterally but Mr Noda said that Japan had been in contact with authorities overseas.

Analysts and investors had questioned whether the government would order the Bank of Japan to sell yen and buy dollars given the difficulties Tokyo would face in convincing its international counterparts, particularly at a time when the G7 is encouraging China to be more flexible with its own exchange rate.

Previous interventions in the market showed that while intervention helped over the very short-term, such as days or weeks, unilateral intervention had not proven particularly successful over the long term.