Japan is signaling its willingness to operate in the FX market if the yen’s sharp volatility continues

Japan is signaling its willingness to operate in the FX market if the yen’s sharp volatility continues

Written by Tetsushi Kajimoto and Kantaro Komiya

TOKYO (Reuters) – Japanese Finance Minister Shunichi Suzuki said on Friday he would not rule out any options for action in the foreign exchange market if the sharp weakness in the yen persists.

Suzuki told reporters at the ministry that he was concerned about the recent rapid and unilateral weakness in the yen, which hit a 24-year low against the dollar earlier this month.

His comments confirmed the same letter by Japanese authorities earlier this month.

Earlier on Wednesday, the Bank of Japan conducted an interest rate check with banks apparently preparing to intervene to stem the sharp declines in the yen.

“If these moves continue, the authorities will take the necessary measures without ruling out any options,” Suzuki said.

“It is important that currencies move steadily, reflecting the economic fundamentals. Sharp (OTC :)) moves are not desirable.”

Suzuki said that a weak yen has both advantages and disadvantages, and he cannot call it right or wrong.

The dollar fell 0.37% against the Japanese yen to 142.96, slightly helped by speculation of possible currency intervention by the Japanese authorities.

Market attention is focused on a slew of monetary policy meetings by the Federal Reserve, the Bank of Japan and the Bank of England next week.

The difference in monetary policy between Japan and other developed countries could weaken the yen further with the Federal Reserve raising interest rates and the Bank of Japan maintaining massive stimulus.

Suzuki said officials will do their best to maximize the benefits of a weak yen in areas such as domestic tourism to attract travelers to Japan to stimulate the economy.

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He said the government is also aiming to put together an economic package with targeted spending to help those affected by the impact of a weak yen on the rising cost of living.

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