The dollar may fall below ¥80 by March and any attempts to halt the move through intervention would have only a short-term impact, Eisuke Sakakibara, formerly Japan's top currency official, said Tuesday.
"Intervention could push the yen rate ¥2 or ¥3 weaker for two or three days, but it wouldn't change the trend," said Sakakibara, now an economics professor at Waseda University in Tokyo.
Sakakibara became known as "Mr. Yen" during his stint at the Finance Ministry for his efforts to influence the yen rate through verbal and actual intervention in the currency markets.
Sakakibara said Nov. 25 in a TV interview that the government may consider intervention if the dollar falls to ¥85. He said U.S. Treasury Secretary Timothy Geithner wants a "gradual decline" of the dollar to correct large trade imbalances and wouldn't be inclined to intervene now.
Sakakibara said Tuesday intervention wouldn't be as effective as it was in 1995, when he headed the Finance Ministry's International Financial Bureau.
"Back then, the U.S. was really scared about the weakening dollar, so I could cooperate" with U.S. counterparts, he said. "Now, Tim Geithner seems to be pushing for a gradual decline of the dollar."
Combining of intervention with an easing of monetary policy was effective in weakening the yen in the mid-1990s, but now the Bank of Japan has no room to cut rates, Sakakibara said.
The yen climbed to 84.83 per dollar Friday, the strongest since July 1995.