Japan will remain vigilant to forex moves, finance minister says

JAPANESE authorities will remain vigilant to currency market moves, Finance Minister Shunichi Suzuki said on Tuesday (Jul 2), as the yen continued its downturn to fresh 38-year lows.

Speaking in a regular post-cabinet meeting news conference, Suzuki said there has been no change in the government’s stance, but stopped short of making usual comments on its readiness to act.

“Foreign exchange levels are set by the market reflecting a complex mix of various factors, including inflation, current account balance, market sentiment and speculative moves,” he said. “We will continue to closely watch the market.”

The yen sank to 161.72 per US dollar late Monday, its weakest level since 1986, keeping markets on heightened alert for any signs of yen-buying operations from Tokyo to prop up the currency.

It has already fallen more than 12 per cent this year as it continues to be weighed down by stark interest rate differentials between the US and Japan.

When asked about the effectiveness of verbal interventions, Suzuki said his comments on foreign exchange are generally in response to questions from reporters and that he was not in a position to comment on their effectiveness.

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A weaker yen is a boon for Japanese exporters, but a headache for policymakers as it increases import costs, adds to inflationary pressures and squeezes households. REUTERS