Japan will take “appropriate” action in response to excessive forex moves and is closely watching market developments, Finance Minister Shunichi Suzuki said Tuesday after the yen weakened relative to the U.S. dollar to levels near where the government has previously intervened.
Suzuki said currency moves should be stable, reflecting economic fundamentals, adding the government does not have specific dollar-yen levels in mind when stepping into the market.
“The government is closely monitoring market developments with a high sense of urgency,” Suzuki told a press conference, after the yen slid past the psychologically important 145 to the dollar.
“If (currency moves) are based on economic fundamentals, that’s how it should be in a way. But speculative moves will affect companies’ business plans and households. If that’s the case, we will take action as appropriate,” Suzuki said.
The yen got a short respite from selling pressure after the Bank of Japan decided to allow 10-year government bond yields to rise beyond their previous ceiling in late July.
But financial markets still expect the dovish BOJ to lag far behind the U.S. Federal Reserve and other major central banks in tightening monetary policy and the yen has been weakening on prospects that the policy divergence will remain.
Last year, Japan repeatedly carried out yen-buying dollar-selling interventions to arrest the Japanese unit’s “rapid, one-sided” drop.
The weaker yen accelerated Japan’s consumer price inflation by inflating import costs for the resource-scarce nation, a headache for households.