Japan ready to take decisive action on forex, finance minister says
The yen hit a fresh 40-year low at close to 164 per dollar.
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[TOKYO] Japan’s Finance Minister Satsuki Katayama reiterated on Friday (Jul 24) the government’s readiness to take action in the foreign exchange market, repeating the same language she has used all week as the yen hit a fresh 40-year low close to 164 per dollar.
“We’re prepared to respond appropriately on foreign exchange whenever necessary, and that means taking decisive action without hesitation,” Katayama said at a regular press conference.
Speculation about possible intervention by Japan mounted as the yen dropped to 163.96, its softest level since November 1986, as oil prices continued to climb on rising hostilities in the Middle East.
The US Treasury Department said in its semi-annual currency report on Thursday that yen weakness has persisted despite the narrowing of US-Japan interest rate differentials, warning excess volatility in the currency was undesirable.
Asked about the report, Katayama said Japan and the United States share the same view that excessive foreign exchange volatility is undesirable. “We remain in close consultation at all times, 24 hours a day, 365 days a year,” she said.
Safe-haven dollar purchases resumed in recent days as renewed strikes in the US-Iran conflict have caused a reversal in oil prices and again fanned inflation fears, in turn buoying expectations the Federal Reserve may hike interest rates.
Masato Koike, senior economist at Sompo Institute Plus, said a unilateral currency intervention by Japan would likely have little effect in correcting the yen’s decline since it’s caused by dollar strength.
“We may need to be prepared for a scenario where no intervention is carried out and the yen weakens further,” he added. REUTERS
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