Japan’s Mimura Sees Some Yen Moves Deviating From Fundamentals

Recent moves by the yen are deviating from economic fundamentals when interest rate differentials are taken into account, Japan’s top currency official said Wednesday.

“Basically we always say you should look at interest rate differentials between yen and the dollar,” and the currency pair should move in line with the gap, Atsushi Mimura , Vice Finance Minister for International Affairs, said. “If you look at the actual movement of foreign exchange and the moves of differentials between US and Japan interest rates on public bonds, you do see some sort of deviation recently, I would say.”

Mimura was speaking with Shery Ahn at Bloomberg’s Global Credit Forum in Tokyo.

The yen touched an eight-month low of 154.48 against the dollar Tuesday after the Bank of Japan left interest rates unchanged last week. While Governor Kazuo Ueda offered subtle hints that a rate hike might be coming nearer, markets appeared unconvinced, sending the yen lower. Japan’s currency was trading around 153.53 late afternoon in Tokyo Wednesday.

Mimura noted that there’s been a steady decline in long-yen positions since around the summer owing to factors ranging from trade and geopolitics to speculation over Japan’s fiscal spending plans.