Word: strongly
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...year high against the U.S. dollar last month. While the Japanese currency has weakened somewhat recently, Bank of Japan governor Masaaki Shirakawa said Sunday that currency-market intervention was possible if the yen's rise resumes. "The strong yen at a time of rapid decline in the global economy has a big negative impact on our economy in the short term," Shirakawa said. (See pictures of Japan and the world...
...primary concern is the financial health of major Japanese exporters such as Toyota, Honda and Sony. Many of Japan's most important companies are hurting as a result of collapsing demand and the soaring yen, which has risen 15% against the dollar over the past 12 months. A strong yen makes Japanese products more expensive, and hence less competitive, in overseas markets...
...Still, it's unclear whether intervention will be necessary. Some argue that the dollar-yen exchange rate is reaching a sustainable equilibrium and that the yen isn't as strong as it appears. "The yen's level until last year was abnormally weak," says Tohru Sasaki, chief currency strategist in Tokyo at JPMorgan Chase & Co. "Now it's coming back to normal...
...interest rate and investing the funds in currencies paying higher interest rates. That was an easy way to make money until central bankers in the U.S. and other countries began slashing borrowing costs as the credit crunch hit and their economies faltered. The carry trade "is a very strong and powerful movement, and it's difficult to stop it," Sasaki says. "I think that Japanese officials understand that, and that's why they haven't intervened...
...many years. To have the same effect as the peak in 1995 - when the exchange rate reached 79.75 yen to the dollar - Japan's currency would have to soar to 48 to the dollar, he says. "If we think about the inflation-rate differentials, the yen is not that strong right now." Tell that to Toyota...