O’Neill: Japan must intervene on yen

The Japanese authorities must stop the yen from strengthening, as exports are the country’s only hope for significant growth, says Jim O’Neill.

The global chairman of Goldman Sachs Asset Management says the yen is already significantly overvalued, hitting a new post-war high this morning against the dollar at 79.32.

Speaking exclusively to Investment Week at a Bloomberg Hedge Funds London event, he said: "The most important issue is to stop the yen from strengthening because that is economically crazy.

"In my opinion, the Japanese authorities need to intervene and do something to reverse it quickly."

O'Neill says although the economic implications of the Japan crisis are relatively unknown so soon after the event, he does not understand why certain parts of the world are so concerned on a financial level.

"In terms of growth, Japan has been so weak for the past decade and the world has done very well despite the country's problems."

However, he adds: "What is dawning on me is this global energy shock because it is affecting every country's plans on nuclear energy. So in that sense, it is not just a Japan issue and that is really quite difficult and troubling, given the pressure on oil prices in the first place."

For more of Jim O'Neill thoughts on the Japan crisis, see next Monday's Investment Week.