Tokyo, Sep 7 (IANS) Japanese Finance Minister Shunichi Suzuki on Wednesday said the government will take “necessary action” if the trend of the weakening yen continues.
Suzuki also told reporters that he is “concerned” about the yen’s rapid “one-sided” movements and that the negative aspects of the yen’s weakness should be monitored, reports Xinhua news agency.
His remarks came after the yen dropped to a fresh 24-year low against the US dollar in the 143-144 yen range and underscored comments he made earlier in the day when the Japanese currency also tumbled versus the dollar.
The government here signaled earlier on Wednesday it stood poised to intervene in the currency markets if the yen continues its rapid depreciation owing to “one-sided” currency moves, with Suzuki calling for stability in currency markets, saying the yen moves should be stable and reflect economic fundamentals.
“Recent moves are rather rapid and one-sided. We need to be watching developments with strong interest,” Suzuki told an earlier press briefing.
The government’s top spokesman Chief Cabinet Secretary Hirokazu Matsuno, meanwhile, also expressed “concern” about the yen’s fall.
He told a briefing that Japan is ready to take action if recent trends continue, without explaining further.
The dollar was trading in the upper 143 yen range on Wednesday morning, levels not seen since 1998, dealers here noted.
The US Federal Reserve’s aggressive interest rate hikes to combat inflation and the likelihood these will continue into next year and could be raised further, have led to the yen being dumped for the dollar.
Conversely, the Bank of Japan (BOJ) has stayed committed to its ultra-loose monetary policy, setting its short-term benchmark interest rates at minus 0.1 per cent, while continuing to guide 10-year Japanese government bond yields to around zero per cent.
The BOJ’s dovish policy stance has seen interest rates between Japan and the US widen, which has triggered the US dollar buying and the yen’s weakness, and is causing volatility in the stock market here.
A weak yen, on the one hand, is a boon for Japan’s export-led economy, as profits from exporters made overseas get a boost when repatriated and price competitiveness is enhanced in foreign markets when the yen is weaker than its major counterparts.
On the other hand, however, a protracted weak yen further inflates prices for already rising energy and raw material products, essential for resource-poor Japan to continually import, which ultimately will further hurt Japan’s already negative trade balance and broader economy.
–IANS
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