Japanes Yen

The yen is as strong as it's been against the dollar in the past 15 years. That has currency traders watching closely for signs Tokyo might intervene to relieve pressure on an already-struggling export-oriented economy.
But when it comes to foreign-exchange action by Japan, where you stand depends on where you sit.
Consider the big picture: When factoring Japan's trading partners and changing prices at home, the yen sits nearly 28% below its 15-year-old highs. China—whose currency grew substantially stronger from 2005 to 2008—has overtaken the U.S. to become Japan's largest two-way trading partner. Japan has also suffered a decade of deflation.
This real-effective exchange-rate index was up 3.6% in the seven months through the end of July. Against the dollar, meanwhile, the yen is up 7.5% in nominal terms. It means the macroeconomic shock won't be as severe as the exchange rate against the dollar implies. That is a good part of the argument, so far, against intervention.
Japan's finance minister, Yoshihiko Noda, has practicality to consider as well. Geopolitics and the size of global currency markets mean Tokyo will find effective intervention difficult without support from the U.S. and Europe. With politicians in both places hoping their own weak currencies will bolster exports, approval—let alone assistance—from those two economies remains unlikely.
When it last intervened, six years ago, Japan sold 35 trillion yen ($410 billion) in 15 months. A repeat would quickly deflate arguments put forth by Washington, Brussels and Tokyo for Beijing to allow the yuan to strengthen.
Standing on principle, of course, will do little for already-suffering Japanese exporters and their tense employees and shareholders. At Toyota Motor, for example, every time the dollar weakens by a single yen, $350 million is wiped out of operating profit. More broadly, Japan's economic recovery is already threatened by a slowing rebound in exports and weakening domestic demand. Currency moves that make Japanese products more expensive overseas are the last thing the economy needs.
Tokyo is addressing the issue with talk, rather than action. In the short run, this has kept yen bulls at bay. For example, the currency weakened slightly Tuesday on reports Prime Minister Naoto Kan and central bank chief Masaaki Shirakawa are to meet next week, as traders speculated the Bank of Japan might yield to pressure to take steps to weaken the yen.
From where both the government and the BOJ sit, things are looking less comfortable by the day.
Write to James Simms at james.simms@dowjones.com