Japan to take action against yen's surge

Japanese monetary authorities are ready to take action to curb sharp gains in the yen against the dollar, a finance ministry source was quoted by Jiji Press as saying on Thursday.

The yen's recent gain was mainly due to "speculative moves based on recognition that it is difficult for Japanese authorities to intervene in the market during year-end and New Year holidays," the unnamed source said.

But "we are in a position to take action whenever necessary," the source said, adding that the Bank of Japan could intervene in New York or European markets while Tokyo markets are closed.

Japanese financial markets will be closed until January 6 for holidays.

The dollar fell below 119 yen this week, due to concerns about a possible military campaign against Iraq and the huge US external deficit, dealers said.

At 12:30 pm (0430 GMT), the dollar traded at 119.02 yen in Singapore against 118.77 yen in New York and 118.68 yen in Singapore on Tuesday. Markets were closed in Singapore on Wednesday for New Year's Day.

A strong yen makes Japanese products less competitive abroad and decreases the value of repatriated overseas earnings.

businessmen by refusing to sign an extradition treaty.