He said that speculative moves are rising and this development can not be overlooked. The renewed strength of the yen once again is threatening the country's foreign trade and hampered the economy's prospects of recovery.
Japan posted its first annual trade deficit since 1980 with a shortfall of JPY 2.49 trillion in 2011, data from the Finance Ministry showed today. This largely reflected the fallout from Japan's worst earthquake on record in March. The yen's rise as well as debt troubles in Europe have also eroded the country's export gains.
The recent rally in the currency was caused by market expectations that the US Federal Reserve will keep interest rates at "exceptionally low levels" until 2014, Azumi told Parliament today.
Economists say that the Finance Minister's remarks may be indicative of another currency intervention from the authorities to contain the currency's strength after last year's record yen sales.
Bank of Japan Governor Masaaki Shirakawa reportedly said on Thursday that the appreciation of yen was mainly caused by the safe-haven capital inflows triggered by global economic uncertainty.
Appearing before the budget committee of the lower house today, he said investors now prefer relatively safer currencies as global economic concerns have heightened risk aversion.
Speaking to Business Leaders in Kagawa today, Bank of Japan Deputy Governor Hirohide Yamaguchi said that biggest risk to Japan's economic outlook is the ongoing European debt problem.
He said that cannot rule out the possibility that confidence in the government bond market might collapse at once triggered by some cue.
Yamaguchi called on the government to take up fiscal structural reforms both in terms of expenditure and revenue before the market confidence is lost.
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