Japanese Finance Minister Observes Currency Market Closely
Minister’s Statement
Tokyo’s finance minister emphasized that authorities are closely monitoring movements in the currency market. This comes after Federal Reserve Chair Jerome Powell’s remarks hinted at potential rate cuts next year, causing the yen to surge against the dollar.
Market Speculation
When asked about Powell’s comments, Finance Minister Shunichi Suzuki refrained from making any direct remarks on market speculations. Powell’s statement on the possibility of rate cuts emerged after the Fed’s recent policy meeting, where policymakers projected lower rates for the upcoming year.
Market Response
Following the U.S. dollar’s decline, the yen experienced a sharp increase, reaching its highest level since July 31 at 140.95 per dollar. Currently, it is trading at around 142 yen to the dollar.
Official Stance
Suzuki emphasized the finance ministry’s position of not commenting on daily currency movements. He stressed the importance of stable currency fluctuations that reflect fundamental economic factors.
Expert Analysis
Atsushi Takeda, chief economist at Itochu Economic Research Institute, suggested that authorities would only intervene in the market if the yen’s movements become excessively rapid, either surpassing 150 to the dollar or falling towards 130. Takeda highlighted the need to correct excessive yen weakening to alleviate the impact of price hikes.
Bank of Japan’s Influence
The anticipation of the Bank of Japan (BOJ) potentially ending negative interest rates has contributed to the recent surge in the Japanese currency. Governor Kazuo Ueda’s indication that this would be “challenging” next year has further influenced market sentiments.
Intervention History
Japan’s last intervention in the currency market occurred in October last year, involving the sale of dollars for yen when the latter plummeted to almost 152 per dollar. Such interventions have historically focused on preventing the Japanese currency’s strength from undermining exports.
