The finance minister said the government and the Bank of Japan shared their concerns about the currency’s fall.
Japanese Finance Minister Shunichi Suzuki said authorities were ready to react to speculative currency movements, a fresh warning that comes days after Tokyo intervened in the foreign exchange market to stem the yen’s fall for the first time in over two decades.
Suzuki also told a news conference on Monday that the government and the Bank of Japan (BOJ) were on the same page in sharing concerns about the currency’s sharp declines.
“We are deeply concerned about recent rapid and one-sided market developments, driven in part by speculative trading,” Suzuki told a news conference. “There is no change in our position to be ready to meet the need” for such movements, he added.
The remark came after the government’s decision on Thursday to intervene in the currency market to stem yen weakness by selling dollars and buying yen for the first time since 1998.
The yen recent steep declineswhich have pushed up the cost of living for households by driving up the prices of imported fuels and food, have been partly due to the widening divergence between the US Federal Reserve’s aggressive monetary tightening and monetary policy ultra-accommodating BOJ.
BOJ Governor Haruhiko Kuroda will deliver a speech to business leaders in Osaka, western Japan, later Monday, where he can comment on the yen and government intervention.
The dollar gained 0.29% to hit 143.78 yen on Monday, continuing its rally towards the 24-year high of 145.90 on Thursday. It fell to 140.31 on the same day after Japanese authorities entered the market.
While the jawbone of government officials may make markets jittery about further intervention, repeatedly intervening in the currency market and selling huge sums of dollars could be difficult due to criticism that Japan may face their G7 counterparts.
“Japan is unlikely to continue to intervene to defend a certain line, such as 145 yen to the dollar,” Japan’s former top diplomat Naoyuki Shinohara told Reuters news agency.
The yen is not alone in its downward spiral. Several other currencies, including the British pound, euro and Chinese yuan, have taken a beating in part due to aggressive interest rate hikes by the US Federal Reserve in recent months.