Tokyo, 24 October, /AJMEDIA/
Finance Minister Shunichi Suzuki on Monday continued to warn that necessary steps will be taken to counter excessive volatility in the currency market, with the yen’s subsequent spike against the dollar causing market speculation that Japanese monetary authorities intervened again.
The yen surged to the 145 zone from around the 150 line in a matter of minutes after Suzuki made the remarks. Japan did not confirm whether another yen-buying, dollar-selling intervention was carried out but its top currency diplomat, Masato Kanda, also said authorities were ready to respond “appropriately” to excess volatility at any time.
“We are monitoring developments in the currency market with a high sense of urgency,” Suzuki told reporters. “We cannot tolerate excessive volatility caused by speculative moves, and we are ready to take necessary steps when needed.”
“We are in a situation where we are confronting speculative moves strictly,” he said.
The yen has continued to depreciate against the dollar, reflecting the widening interest rate gap between Japan and the United States.
The Japanese authorities intervened Friday during New York trading hours, after the yen neared 152 against the dollar. It was the second intervention since Sept. 22 when Japan spent up to 2.84 trillion yen ($19 billion) to shore up the currency.
Market intervention is seen as a last-resort move and analysts say its impact could only be limited. Japanese officials have said the currency should move stably, reflecting economic and financial fundamentals.
After the yen’s surge in the morning, it returned to around the levels at which it was trading before the suspected intervention.
“We refrain from commenting specifically on any currency intervention,” Chief Cabinet Secretary Hirokazu Matsuno told a regular press briefing.
Rapid, one-sided yen fluctuations have raised alarm among Japanese policymakers, who are seen as concerned about the speed at which the yen has been depreciating, not its specific levels.
The first market intervention on Sept. 22 was confirmed by the government and Suzuki said the United States had shown a “certain degree of understanding” of the move.
Since then, financial markets were on edge over further action amid talk of “stealth” intervention but Japan has not confirmed whether it has carried out another intervention since the first round.
“We will take appropriate steps against excessive volatility 24 hours a day, 365 days a year,” said Kanda, vice finance minister for international affairs.
The Bank of Japan is scheduled to hold a two-day policy meeting from Thursday, at which its Policy Board is widely expected to maintain its ultralow rate policy.
U.S. President Joe Biden, heading into midterm elections next month, has said he is not concerned about the strength of the U.S. dollar. The world’s largest economy has seen inflation accelerating at its fastest pace in decades.
Unlike Japan, hit by cost-push inflation caused by surging import costs, price hikes have been supported by strong domestic demand in the United States.
BOJ Governor Haruhiko Kuroda has not budged over the need to support the economy with monetary easing.
