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High yen could 'hollow out' Japan industry: PM

14 september 2011, 18:21
0
Japanese Prime Minister Yoshihiko Noda. ©AFP
Japanese Prime Minister Yoshihiko Noda. ©AFP
The sky-high yen risks "hollowing out" Japan's industrial heart and hampering efforts to rebuild after the March 11 quake and tsunami, AFP reports, citing the country's new prime minister Tuesday.

Addressing a special session of the diet in Tokyo, Yoshihiko Noda said the rocketing value of the currency could break domestic industries, wipe out jobs and hamper efforts to rebuild communities destroyed by March's quake-tsunami.

"The yen's historic rise, coupled with catch-ups by emerging nations, has caused a crisis of unprecedented industrial hollowing-out," Yoshihiko Noda told lawmakers in his first major policy speech.

"We hear screams from exporters and from the small and mid-sized companies that have led our country's industries. If things carry on like this, domestic industries could go downhill and jobs could be lost.

"If that happens, it would be almost impossible to break out of deflation and reconstruct areas hit by the disaster."

The value of the yen last month hit a post-World War II high as financial uncertainty in Europe and the United States has sent traders scurrying into the safe-haven currency.

It has continued to rise in the six months since the quake-tsunami that left 20,000 people dead or missing.

Despite three interventions in the markets in the past year, two of which were unilateral, the yen has remained strong, squeezing exporters.

In Tuesday trade it stood at 77.09 yen to the dollar.

"We need to take every possible policy measure in cooperation with the Bank of Japan," Noda said, noting that the upcoming third supplementary budget would include emergency economic measures.

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