Japan Says FX Intervention an Option if Excessive Yen Moves
Japan issued its strongest warning yet to foreign exchange markets over sharp movements in the yen, with the nation’s finance minister specifically mentioning intervention as an option as she tries to push back against continued falls in the currency.
“The government will take appropriate action against disorderly FX moves, including those driven by speculation as needed, in line with the approach set out in the Japan-US joint statement issued in September,” Finance Minister Satsuki Katayama told reporters on Friday. “Since the Japan-US finance ministers’ paper in September clearly included FX intervention, that’s naturally something we can consider.”
Katayama said she is deeply concerned about recent foreign-exchange moves, which she described as extremely one-sided and rapid.
The yen briefly strengthened after Katayama spoke, to briefly touch 157.20 against the dollar from around 157.43, before giving up all of those gains as it continues to hover near its weakest levels since January.
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Market players are eyeing the 160 per the dollar mark, a level around which the authorities stepped into the market repeatedly last year.
Several factors are weighing on the yen, including speculation that Takaichi’s pro-stimulus policies might deter the BOJ from hiking its benchmark rate in the near term at a time when bets on a US Federal Reserve cut have receded.
Japan government panel member Takuji Aida suggested in an interview with Bloomberg on Thursday that Japan may be closer to intervening than the market generally assumes and could move before the yen reaches 160.
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He noted that Prime Minister Takaichi’s government, which believes in Japan’s fiscal soundness, is in a stronger position to tap into its ample foreign reserves if needed.
In September, US Treasury Secretary Scott Bessent and former Japanese Finance Minister Katsunobu Kato reaffirmed in a joint statement their basic commitment to let markets determine currency exchange rates and not to target them for a competitive advantage.
The two chiefs also agreed to leave scope for intervention in certain circumstances in line with previous statements, saying that it should be reserved for dealing with excess volatility or disorderly movements in the currency market.