March 28, 2004

LONDON (Reuters) - Japan's 150-billion-pound ($273 billion) campaign to weaken the yen and strengthen the dollar has officially come to an end, the Times newspaper reported, citing sources at the Bank of Japan.

The currency intervention campaign, which has provoked criticism in Washington and deep concern in London, is thought by Japanese officials to be no longer necessary because the country's economic recovery is gathering strength, the London Times newspaper reported in its March 29 edition.

BOJ sources said that they would intervene in the markets only when there was extraordinary volatility, but made clear that the unprecedented dollar purchases of the past seven months were formally over, the paper reported.

The BOJ and Japan's Ministry of Finance will no longer buy dollars even to smooth out the sort of sudden price spikes that have prompted intervention in the past, it added.

"Even if the market shows volatility, we believe that things are not so fragile now," the BOJ sources said, in what the paper describes as an exclusive briefing.

"We have reached the point where we are confident that the Japanese recovery no longer depends on export strength ... the interventions have served their purpose," the sources added.

The dollar was last quoted at 105.35 at 5:30 p.m. EST.

The intervention drive to support the falling dollar against the yen began in earnest last September, and has left Japan with paper trading losses of more than 50 billion pounds, the paper said.

The end of intervention has apparently been brought about by Toshihiko Fukui, the BOJ governor, who has restored confidence in the Japanese economy since his appointment a year ago and won plaudits from international financial authorities for his deft monetary management, the paper said.

http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=4679937