Title: Japan’s FX Diplomat Warns of Potential Volatility in the Yen
Subtitle: Government Prepared to Take Action Against Excessive Currency Moves
Date: November 1, 2022
Tokyo – Masato Kanda, Japan’s vice minister of finance for international affairs, issued a warning regarding the recent “one-sided, sharp” movements in the yen, signaling that the government is prepared to intervene if necessary. Kanda’s comments come as the currency’s value dropped below a critical level.
The Japanese authorities have been closely monitoring the yen’s depreciation due to concerns about rising import prices and the potential impact on households’ cost of living. Speculators have been identified as one of the major drivers behind the currency’s recent volatility.
Kanda stated that the situation surrounding yen movements has become more tense, prompting authorities to be on standby and ready to respond appropriately without ruling out any options. While he did not specify the kind of action that may be taken or when it would occur, he made it clear that the government is prepared to act against excessive yen moves.
Chief Cabinet Secretary Hirokazu Matsuno also expressed the government’s readiness to take appropriate action against any excessive yen movements. These warnings were stronger than those issued the previous week, emphasizing the authorities’ concern and determination to address the issue.
The yen experienced renewed selling pressure after the Bank of Japan made adjustments to its yield control policy. Market participants deemed these changes insufficient to close the significant interest rate gaps that have been weighing on the currency for an extended period.
Following Kanda’s warnings, the yen slightly rebounded against the dollar, but remains close to its one-year low. On Tuesday, the yen had reached a one-year low against the dollar and a 15-year low against the euro following the BOJ’s decision, which disappointed market expectations of a more substantial policy shift.
Notably, this is not the first time the Japanese government has intervened in the currency market to address a low-valued yen. In September of the previous year, the government entered the market following the yen’s dip to 145 per dollar, which was the first intervention since 1998. It intervened once again in October 2022 after the yen fell to a 32-year low of 151.94.
In conclusion, the Japanese government remains vigilant and ready to respond to potential currency volatility, signaling its commitment to stabilize the yen and mitigate the economic consequences of its depreciation.
Reporting by Takaya Yamaguchi, Satoshi Sugiyama, and Leika Kihara; Editing by Sam Holmes and Shri Navaratnam.
Disclaimer: This article abides by the Thomson Reuters Trust Principles.