Action should be taken to strengthen Yen

Latest CNN News---The man once tasked with keeping the yen stable says, despite the currency's rapid climb, this is not a time for intervention. Eisuke Sakakibara,Japan's top currency official in the late 1990s, tells Latest CNN News's that effective, persistent intervention is not possible without the consent of the other currency party, somethingJapandoes not have from theUnited Statesat the moment. "Implicitly, theU.S.is following a weak dollar policy. If they are following a strong dollar policy like Robert Rubin in the 1990s, that is a different story," says Sakakibara, widely-known as Mr. Yen. He predicts the strong yen is here to stay for some time – and it could even break the mark of 70 yen to the U.S. dollar. The Japanese yen is considered a major safe-haven currency. In uncertain times, investors flock into the yen and what they see as the relative stability of the Japanese economy, despite its ultra-low interest rates. The "fear factor" for investors has been high in 2011 thanks to the European debt crises and the sputtering in theU.S.economy. That has driven the yen up almost 5% to post-World War II record highs against the dollar. It's a situation that irks Japanese manufacturers likeToyotaor Panasonic. When the yen gets stronger, the companies make less money selling in the major markets of theUnited StatesandEurope. Japan's government intervened on August 4 to try and stop the yen's rise, but the impact was short-lived.Switzerlandhas chosen to go with continuous intervention to keep the Swiss Franc trading at or above 1.20 to the Euro. Such intervention would no be an option forJapan, says Sakakibara, because it's a much bigger economy thatSwitzerlandand the amount of intervention required would be unsustainable. Instead, he says, the solution forJapan's manufacturers is to globalize. They should use the strong yen to build production bases outsideJapan, for mergers and acquisitions and to grow globally. "We should change our mentality to take advantage of the strong yen, rather than to complain about the strange yen," he says with a laugh. "If you are really a globalized company, exchange rate really doesn't affect you."