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The Yen Drifts Higher in Asian Trading - 2002-05-23

The yen drifted higher in Asian trading Thursday, one day after the Bank of Japan intervened in the currency markets to stem the yen's surge. The central bank warns that it may step into the markets again to keep the yen from gaining too much ground.

Japanese officials confirm that on Wednesday the Bank of Japan sold yen and bought dollars, after the yen strengthened to 123.52 on the dollar. That is the yen's highest level since early December. The currency has gained almost 7 percent since April.

It was the first time in eight months that the BOJ jumped into the currency market. Analysts say the move reflects Tokyo's commitment to shore up exports, a crucial engine for Japan's economic growth.

A strong yen makes Japanese exports relatively more expensive for overseas consumers. That could harm sales for Japanese carmakers and other large exporters.

Finance Minister Masajuro Shiokawa tells reporters that "Japan reacted to the currency's rise because rapid market movements create confusion."

Japan is eager to prevent a stronger yen from slowing the nation's recovery from an 18-month recession. Tokyo announced Thursday that its trade surplus with the world rose 27 percent in April, compared with the same month last year, with stronger demand for Japanese goods abroad helping exports grow for the first time in more than a year.

Thursday in Tokyo, the dollar was trading at around 124.26 yen.