JAPANESE Finance Minister Shunichi Suzuki said on Friday (Apr 5) that excessive exchange-rate moves were undesirable, reiterating the government’s resolve to take appropriate actions against sharp yen falls.
“It is important for currency rates to move stably reflecting fundamentals. Excessive volatility is undesirable. We are looking at market moves with a high sense of urgency,” Suzuki told reporters when asked about the yen’s recent declines.
“There is no change to our stance that we are ready to respond to excessive currency moves, without ruling out any options.”
The US dollar fell to a two-week low of 150.95 yen after the remarks, as repeated verbal warnings by authorities keep investors on guard against the chance of yen-buying intervention.
The yen fell to a 34-year low of 151.975 versus the US dollar last week despite the Bank of Japan’s (BOJ) historic policy shift that ended eight years of negative interest rates, as markets interpreted its dovish guidance as a sign further rate hikes will be some time away.
Shortly after the yen hit the 34-year low on Wednesday last week, Suzuki said authorities were ready to take “decisive steps” against speculative yen moves in the strongest warning to date that currency intervention could be imminent.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
He has held off on using such language since then, but continued to warn that authorities will not rule out any options to deal with excessive yen declines.
Markets are also on the lookout for any clues from BOJ governor Kazuo Ueda on how soon the central bank could next raise interest rates.
In an interview with Asahi newspaper, Ueda said inflation would likely accelerate “from summer towards autumn” as this year’s bumper pay hikes push up prices, signalling the chance of another interest rate hike later this year.
Ueda also said the BOJ could “respond with monetary policy” if yen declines significantly affect inflation and wages, suggesting that yen moves were among the factors that could trigger an interest rate hike.
“Exchange-rate moves are among important factors that affect the economy and prices,” Ueda said in parliament on Friday.
“We will continue to scrutinise currency market developments and their impact on the economy and prices, while working closely with the government,” he said.
Expectations that the interest rate gap between the United States and Japan will remain wide have continued to drive yen selling. REUTERS
