国际英语新闻：News Analysis: Yen to remain strong amid dismal expectations for world economy

Another important reason for the soaring yen market is the Japanese government's weak intervention. There has been no direct resistance from the authorities to suppress the rising yen, except "verbal intervention" from Japanese leaders.

Although a strong yen will hamper the export sector, the key to Japan's economy, and will have adverse effects on the whole economy, the government has not implemented any direct intervention in the currency market.

Analysts have pointed to the huge cost of a government intervention and uncertainty in its effectiveness as the main reasons behind Tokyo's inaction. A recent report from the Bank for International Settlements showed that daily turnover in Japan's foreign exchange market was more than 560 billion U.S. dollars. The cost of government intervention would be huge in such a big market.

Right now the Federal Reserve has already indicated it will further loosen its monetary policy as U.S. economic recovery proves slower than expected. Under such circumstances, direct intervention into the market by the Japanese government is not expected to bring about any durable effect on the currency market, though it may cool down the rising yen temporarily. In addition, chain reactions will be triggered if more countries follow suit, which will harm the already fragile economic recovery and Japan's fundamental economic interest.

Most importantly, many Japanese companies have now strengthened their capabilities in dealing with the risks of a high currency. Figures show Japanese exports have shown no signs of a trend down despite the stronger yen.

Since the 1980s, the competitiveness of Japanese companies has been rising as a result of their multinational operation strategy, technology development and skillful management of financial tools. That also explains why Tokyo is not keen in bringing down the yen.

YEN TO REMAIN STRONG FOR A WHILE

The Japanese yen has not reached its highest point in history, and its effective exchange rate is still 30 percent lower than the record high of 1985. Analysts predict the yen will rise further and may stay high for a while, as the dollar stays weak for some time under the limp world economic recovery.

As a result, exporting companies in Japan are expected to take more measures to hedge risk from the strong currency. Some companies may consider transferring their production or technology development sectors overseas, which may lead to changes in the distribution of industry in Asia.

The appreciation of yen will also put pressure on other Asian currencies, whose economies are holding strong, particularly the emerging economies of China and India.