Laika Kihara, Makiko Yamazaki
TOKYO (Reuters) – Japan’s Finance Minister Shunichi Suzuki said last week’s talks with the U.S. and South Korean finance ministers had laid the groundwork for the Japanese government to counter excessive movements in the yen, adding that there had been no previous talk of possible intervention. issued the strongest warning.
“We expressed strong concerns about how the weaker yen will drive up import costs. Our views were shared not only in our talks with the South Korean side, but also in the trilateral meeting, including the United States,” Suzuki told Congress on Tuesday. Ta.
“I do not deny that these developments have laid the foundation for Japan to take appropriate action (in the foreign exchange market), but I will not say what that action will be,” he said.
The new warning comes after the dollar rose to 154.85 yen against the yen, its strongest level since 1990, and markets remain on the lookout for signs of intervention by the Japanese government to support the yen.
The United States, Japan and South Korea agreed last week to “consult closely” on foreign exchange markets in their first trilateral fiscal dialogue, acknowledging Tokyo and South Korea’s concerns over the recent plunge in their currencies.
The unusual warning by the three countries’ treasury secretaries, inserted in a joint statement after the meeting, was seen by some analysts as Washington’s informal agreement for Japan and South Korea to intervene in the market if necessary.
Satsuki Katayama, a senior member of the ruling party, said Japan could intervene in the foreign exchange market at any time because the recent yen depreciation has been excessive and deviated from fundamentals.
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“If Japan acts now, I don’t think it will be exposed to any criticism,” Katayama told Reuters in an interview on Monday, in response to a question about possible currency intervention.
Bank of Japan meeting attracts attention
While a weaker yen promotes exports, it also raises import prices and household living costs, posing a headache for Japanese policymakers.
Suzuki stressed at a regular press conference early Tuesday that Japanese authorities will work closely with overseas authorities to address excessive volatility in foreign exchange markets.
Suzuki told reporters, “We are closely monitoring market movements with a high sense of crisis,” adding that Tokyo authorities are taking action against excessive currency fluctuations “without excluding all options.” He added that he was ready to wake him up.
Hideo Kumano, chief economist at Dai-ichi Life Economic Research Institute, said Japanese policymakers have escalated verbal warnings to alert traders to possible interference ahead of next week’s Golden Week holiday. He said there may be.
“Regardless of whether there is intervention or not, the market is definitely on high alert for the possibility of intervention, he said.
The recent weakness in the yen comes on the back of a series of positive U.S. economic data, particularly on inflation, which has pushed the dollar to a five-month high and suggests the U.S. Federal Reserve is unlikely to rush to cut interest rates this year. This happened in response to the strengthening of
The weaker yen could affect the timing of the Bank of Japan’s next interest rate hike, after Bank of Japan Governor Kazuo Ueda suggested last week that the bank is prepared to tighten policy if the weaker yen makes it difficult to boost inflation. The market’s attention is focused on the impact it will have. ignore.
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Governor Ueda told the Diet on Tuesday that the Bank of Japan would raise interest rates if inflation accelerates toward its 2% target as expected.
The Bank of Japan will conclude its two-day policy meeting on Friday. Markets expect short-term interest rates to remain unchanged, but sources told Reuters the central bank expects inflation to remain near its 2% target for the next three years.
Japan last intervened in foreign exchange markets in 2022, first in September and second time to support the yen.
