TOKYOJapan kept markets on edge on Tuesday, saying it was ready to step into foreign exchange markets again to curb speculation a day after it sold a record of nearly $100bn worth of yen to tame its high-flying currency.Reutersreported that Tokyo intervened after the yen repeatedly hit record highs against the dollar, adding to authorities concerns that excess speculation was driving up the yen and hurting the export-reliant economy if the gains were left unchecked.Bank of Japan money market data released on Tuesday suggested that around 7.7 trillion yen ($98.7bn) was sold in Mondays intervention, well above previous record of 4.5 trillion yen set in August.We are engaging in a war of nerves (with markets) and we will make timely and appropriate decisions, Finance Minister Jun Azumi told reporters after a cabinet meeting.Following the intervention, the dollar rallied as high as 79.55 yen on Monday, a three-month peak, after brushing a record low of 75.31 yen.The United States dollar was trading at around 78.08 yen on Tuesday after briefly touching 79.10 yen.Tokyos second intervention in less than three months and its third this year, followed repeated warnings about the yens negative impact on the economy and came just ahead of the Group of 20 summit in Cannes, France on November 3-4.The summit will focus on Europes efforts to contain its sovereign debt crisis and avoid a repeat of the financial shock that roiled markets after the Lehman Brothers collapse in 2008.But many market players had thought Tokyo would hold fire before the talks, worried that an intervention may irk its G20 partners as they grapple with sagging growth and exports.However, Azumi argued that Tokyos action was justified in the light of last months G20 statement warning that excess currency volatility hurt economic and financial stability.I will tell them exactly what has happened. That is, (the yen) has not reflected economic fundamentals. We acted based on my sense of crisis and our national interests, Azumi said.The Japanese authorities have been voicing growing alarm at the yens climb fueled byconcerns about Europes debt crisis and US economic health rather than optimism about Japans prospects as it still recovers from the March earthquake and tsunami.Currency trades are settled two days after the transaction and the BOJs projection for Wednesdays money market conditions showed there will be 7.68 trillion yen in payments to banks from the public sector, which is a good indication of the size of the intervention.Traders said the intervention helped exporters offload dollars at a better rate and that there was some demand for dollars from Japanese banks.But they cited a swathe of dollar sell orders above 78.50 yen and options market showed bets on the yens gains against the dollar on a one-month horizon had not eased significantly, reflecting the markets belief that the impact of intervention would not last more than a few weeks.
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