Japanese Finance Minister Warns Against Speculative Currency Moves
Tokyo (Reuters) – Japanese Finance Minister Shunichi Suzuki Raises Concerns
Speculative Moves Behind Recent Yen Declines
Japanese Finance Minister Shunichi Suzuki expressed worries on Friday about “speculative” activities driving the recent drops in the yen. This suggests that authorities are prepared to step in if the currency plummets excessively.
Concerns Over Yen Movement Speed
Suzuki highlighted the importance of monitoring the pace, rather than the magnitude, of the yen’s fluctuations. He reiterated Tokyo’s stance on intervening to curb disorderly currency shifts, emphasizing the need for stable rate adjustments reflecting market fundamentals.
Market Speculation despite Narrow Interest Rate Gap
Despite the slight reduction in the interest rate gap between the U.S. and Japan, traders continue to sell off the yen, attributing this behavior to speculative actions in the market. Suzuki emphasized the undesirability of excessive volatility and emphasized the need for a balanced currency fluctuation environment.
Yen Declining Since BOJ Policy Changes
Following the Bank of Japan’s decision to end its negative interest rates and modify its stimulus program last week, the yen has been on a downward trend. The currency hit a 34-year low against the dollar this week, but has slightly recovered amid expectations of gradual rate hikes.
Impacts of Yen Depreciation on Japan
While a weak yen traditionally benefits major Japanese manufacturers by boosting profits, sharp declines in the currency have presented challenges for Tokyo. The increased cost of raw material imports has negatively affected consumption and retail earnings, adding to the country’s economic concerns.
