Japan warns on yen after currency hits fresh 10-month low

THE yen set a fresh 10-month low against the US dollar on Wednesday (Sep 6) morning after Japan issued its strongest warning over sharp currency movements in weeks.

The nation’s top currency official said speculative moves could be seen in the foreign exchange market and warned that Tokyo was prepared to take action if needed.

“If these moves continue, the government will deal with them appropriately without ruling out any options,” said Masato Kanda, vice finance minister for international affairs.

While the comment briefly pushed the yen to 147.37 against the US dollar as traders weighed the risk of Tokyo intervening in the market for the first time since October last year, the greenback regained ground to hit 147.82.

The US currency strengthened overnight against major peers amid a selloff in Treasuries.

Kanda said currencies should move stably in the market in a reflection of economic fundamentals, noting that there have been rapid moves this year like last year. Officials are watching the market with a high sense of urgency, he added.

“These developments bring uncertainty to businesses and households, which will have a negative impact on the economy,” he said.

Japan’s currency officials have largely stayed quiet in recent days as the yen inched lower. They repeatedly said in the past that they are concerned about sharp movements in the yen rather than specific levels against other currencies.

Last year’s interventions worth around US$62 billion came after the yen moved more than 2 yen against the US dollar in the previous 24 hours.

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“The yen suddenly fell by more than 1 yen overnight, which had already increased concern about verbal intervention,” said Tsutomu Soma, a bond and currency trader at Monex. “Still, there’s still some way before an actual intervention. Market participants themselves see the line of 150 as a big hurdle.” BLOOMBERG