Japanese monetary authorities stepped into the Tokyo currency market Friday morning to sell yen for dollars to stem the yen's "violent" appreciation, Finance Minister Kiichi Miyazawa said.
The Bank of Japan's first intervention since July 21 came after stronger-than-expected gross domestic product figures for the April-June quarter, released Thursday, led to a sharp rise in the value of the yen.
The intervention lifted the dollar to the 109 yen level, up from 107.71-74 yen at 9 a.m.
At one point in the morning, the dollar touched 107.65 yen, the lowest level since August 1996.
Some dealers said the BOJ appeared to have bought $1 billion to $1.5 billion in repeated actions.
Miyazawa approved the yen-selling option the day before in case the exchange rate moved violently, he told a regular news conference.
His explicit remark was apparently intended as a strong message to the market that Japan will not allow the yen's rapid appreciation, which could damage the country's economic recovery.
Miyazawa said he does not think the yen's appreciation will be discussed during a series of international economic meetings scheduled in Washington later this month. It is Japan's own problem as the market reacted to positive economic growth, he noted.
GDP expanded a modest 0.2 percent in the April-June quarter from the previous quarter. Miyazawa said that although figures show the decline has stopped, the economy is still teetering.
Private consumption and corporate capital investment are too fragile to expand without government help, he said, stressing the need for a supplementary budget.