The government is closely monitoring foreign exchange movements with a heightened sense of urgency and considering all possible actions, stated Finance Minister Shunichi Suzuki on Tuesday, as the yen was trading just below the significant 150 level against the U.S. dollar.
Suzuki emphasized that Japanese authorities are focusing on volatility rather than specific levels when it comes to potential currency intervention, amidst concerns about another yen-buying, dollar-selling operation.
“It is crucial that currency movements remain stable and reflect the underlying fundamentals,” Suzuki expressed during a press conference following a Cabinet meeting. “We will continue to closely monitor developments with a heightened sense of urgency and respond with all possible measures.”
These statements represent the latest verbal warning from Japanese authorities, who typically issue multiple warnings before intervening in the market.
The weakening yen has led to increased import costs for Japan, which heavily relies on foreign energy and raw materials.
Financial markets have priced in a further divergence in the monetary policy paths of Japan and the United States, partly due to differences in the inflation rate.
While the Bank of Japan has ruled out an immediate shift from ultralow interest rates, in contrast, the Federal Reserve is expected to proceed with another rate hike by the end of the year.
The dollar has surpassed the levels at which Japanese authorities intervened last year to slow the yen’s decline.
When asked if the 150 mark serves as a threshold for intervention decisions, Suzuki remarked, “Currency levels are not our criteria. It is volatility that matters.”
Suzuki acknowledged that the yen’s depreciation has contributed to recent inflation in Japan and stated that the government will closely monitor the impact of this depreciation.
Later this month, the government will develop an economic package to alleviate the effects of rising prices for daily goods.