TOKYO, Feb 16 - Japanese Finance Minister Sadakazu Tanigaki defended the government's yen-selling intervention on Monday, saying such action helped buffer the economy from a volatile currency and that it would continue to act as needed. "Rapid moves in foreign exchange have a significant impact on corporate earnings," Tanigaki said in parliament. "By soothing market sentiment, and controlling speculation, we are helping to ease the negative impact on the real economy." The yen traded at around 105.42/47 to the dollar on Monday after hitting a three-year high of 105.16 yen last week, with dealers wary over possible intervention by Japanese authorities. Japan sold a record 20 trillion yen ($189.7 billion) in the foreign exchange market last year, followed by over seven trillion yen in January alone, also a record for a single month.
"Our basic stance is that we will take necessary measures when markets become disorderly through speculative moves," Tanigaki said. A stronger yen is seen damaging to Japan's exporters, such as auto and high-tech manufacturers. Exports are considered the main engine of the economy as domestic demand remains stuck in a decade-long slump. Some analysts warn that Japan's yen-selling intervention is too costly and unsustainable. Official data shows financing bills for intervention funds totalled around 65.46 trillion yen at the end of September and analysts estimate the amount at around 77 trillion as of January. Tanigaki said this posed no problems yet, as there was enough demand for such bills so far. ($1=105.45 yen)//