Japan 'Alarmed' by Yen's Slide, Warns of Intervention
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The Japanese government is "alarmed" by recent sharp moves in the currency market and stands ready to intervene if speculative activity becomes excessive, top finance officials said on Friday, reports Reuters. This strong statement comes as the yen continues its rapid decline against the dollar.
The dollar reached a peak of 157.93 against the yen on Friday, its highest level since July, following the Bank of Japan's (BOJ) decision to keep interest rates unchanged on Thursday. BOJ Governor Kazuo Ueda's comments following the meeting offered little clarity on how soon the central bank might raise borrowing costs.
"We have been recently seeing one-sided and sharp moves," Finance Minister Katsunobu Kato told a regular news conference. "As we are alarmed by recent currency market developments including those driven by speculators, we'll take appropriate action against excessive moves."
This marks a rare instance of Japanese policymakers explicitly describing the currency situation as alarming, highlighting the government's heightened concern over the weakening yen.
In separate remarks to reporters, Japan's top currency diplomat Atsushi Mimura echoed the government's stance, stating that he too has been alarmed by recent currency moves and signaling a willingness to take appropriate action.
The BOJ's rate-setting meeting on Thursday concluded shortly after the US Federal Reserve cut interest rates. However, the Fed also signaled a more cautious path of easing in the coming year, suggesting that the US-Japan interest rate differential might not narrow as quickly as previously anticipated.
Mimura, vice finance minister for international affairs, declined to comment when asked about the US-Japan rate differential and the BOJ's communication style.
Japan last intervened in the currency market in July to support the yen after it tumbled to a 38-year low below 161 per dollar.
Kato also revealed that G7 finance leaders held an online meeting on Thursday night under Italy's presidency to discuss support for Ukraine and the impact of artificial intelligence on the global economy. Kato and BOJ Governor Ueda participated in the call.