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Huitong Financial App News-- the Japanese GovernmentBlockchainslotsMasato Kanda, chief currency diplomat of Japan, said on Tuesday that Japan may have to take action against any disorderly, speculative foreign exchange fluctuations, which strengthensBlockchainslotsTokyo is willing to intervene again to support the fragile yen.
Kazuo Ueda, governor of the Bank of Japan, said currency movements were one of the topics he discussed during a meeting with Japanese Prime Minister Fumio Kishida on Tuesday, indicating that the authorities are wary of the recent fall in the yen.
Kanda, Japan's vice minister for international affairs, who also oversees the country's monetary policy, said the government did not need to intervene if stable exchange rate fluctuations reflected fundamentals.
"but when speculation leads to excessive volatility or disorderly volatility, the market does not function and the government may have to take appropriate action," he said. We will continue to adopt the same sound approach as in the past. "
Kazuo Ueda also said that the central bank will guide monetary policy and pay close attention to how the depreciation of the yen affects inflation, suggesting that the trend of the yen may affect the speed and timing of future interest rate increases.
"I mentioned that in general, currency movements may have a potentially significant impact on the economy and prices, so the Bank of Japan will carefully examine the guidance policy for the recent decline of the yen," Ida told reporters after meeting with Prime Minister Kishida. "
While the weak yen is good for Japanese exporters, it has become a headache for policy makers as it increases import costs, increases inflationary pressures and squeezes household spending.
It intervened for at least two days last week to prop up the yen, which fell to its low more than three decades ago.
According to the Bank of Japan, the authorities spent more than 9 trillion yen to defend the yen, helping the yen to rise from 160 to the dollar in a week.Blockchainslots.245 yen rose from a 34-year low to a high of about a month 151Blockchainslots. 86 .
It is estimated that the authorities spent about $60 billion to prop up the yen in their last market attempt in September and October 2022.
The yen is down nearly 9% against the dollar this year.
Japanese companies have traditionally tended to a weak yen because of Japan's heavy reliance on exports. But they now question whether the yen's weakness has become too good.
Masakazu Tokura, chairman of the powerful Keidanren business lobby, said at a regular news conference on Tuesday: "in any case, it is too much for the yen to fall below 150 against the dollar." He added that if the authorities intervened, the timing would be "very good".
The continued decline in the yen has put the Bank of Japan in a difficult position. Despite the BoJ's landmark decision in March to abandon negative interest rates, the yen has been under pressure as Japanese interest rates remain close to zero.
This dynamic has prompted the flow of money from the yen to high-yielding assets, and the pressure has intensified in recent months as expectations of the Fed's interest rate cut have receded.
Last month, Ueda hinted that the Bank of Japan could raise interest rates in several stages over the next few years, possibly in the autumn. But the hawkish signal has been overwhelmed by the market, which is focused on clues to selling the yen.
Raising interest rates too hastily could also damage Japan's fragile economic recovery, a risk highlighted by the governor even as the BoJ gradually withdrew its massive monetary support.
Many analysts expect the BoJ to raise interest rates from around zero sometime this year, although they are divided over the pace at which borrowing costs have risen since then.
USD / JPY daily chart source: EURJPY traded at 155.11 against JPY at 11:49 Beijing time on May 8th.