Japanese Finance Minister Shunichi Suzuki reiterated on Thursday that authorities would consider all possible measures to address significant fluctuations in exchange rates, as the dollar surged to its highest level against the yen in 34 years.
Addressing reporters, Suzuki emphasized that the focus was not solely on specific dollar/yen exchange rate levels, such as 152 or 153 yen per dollar, but also on understanding the underlying factors driving these fluctuations. He emphasized a sense of urgency in monitoring the situation and assessing the implications.
Expressing concerns about excessive currency movements, Suzuki underscored the importance of currencies moving in a stable manner reflective of economic fundamentals. In parliamentary discussions, he highlighted both the advantages and disadvantages of a weak yen, particularly its potential impact on prices.
The yen’s decline past 153 per dollar, its lowest level since 1990, followed the release of robust U.S. inflation data on Wednesday, with the dollar trading at 152.90 yen in Asia on Thursday.
Market observers have been attentive to any indications of potential intervention by Japanese authorities, who last intervened in the currency market in 2022 to support the yen.
Masato Kanda, Japan’s top currency diplomat, acknowledged the rapid movements in the yen and indicated a willingness to consider various measures. However, neither Kanda nor Suzuki specified whether the recent yen depreciation was deemed excessive or warranted immediate intervention.
While Kanda emphasized the adverse effects of excessive volatility on the economy, he refrained from specifying a particular dollar/yen level for intervention, stating the importance of responding appropriately to significant movements without ruling out any options.
Despite the yen’s weakening trend, some analysts noted a perceived lack of determination among Japanese authorities compared to interventions in 2022. This observation reflects the current context, where the dollar’s strength is attributed to a robust U.S. economy and significant interest rate differentials between Japan and the United States.
Masafumi Yamamoto, chief FX strategist at Mizuho Securities, suggested that Japanese authorities may view intervention as ineffective given these broader economic factors, despite the yen’s depreciation beyond previous thresholds.
