Japan says it won’t rule out any FX action as yen hits 34-year low

By Thomson Reuters Apr 10, 2024 | 10:00 PM

By Satoshi Sugiyama and Yoshifumi Takemoto

TOKYO (Reuters) -Japanese Finance Minister Shunichi Suzuki said on Thursday that authorities would not rule out any steps to deal with excessive exchange-rate swings after the dollar surged to a 34-year high against the yen.

“We are not just looking at (dollar/yen) levels themselves such as 152 yen or 153 yen (per dollar) but also analysing their background,” Suzuki told reporters. “We are looking with a high sense of urgency,” he added.

Suzuki also said excessive currency moves are not desirable and that it was important for currencies to move in a stable manner reflecting fundamentals.

Speaking in parliament, Suzuki later said while the weak yen had both merits and demerits, he was always concerned about its impact on prices.

His comments came after the yen weakened past 153 per dollar, the lowest since 1990, following Wednesday’s release of strong U.S. inflation data. The dollar stood at 152.90 yen in Asia on Thursday.

Market participants have been on alert for any signs of yen intervention from Japanese authorities.

Japan last intervened in the currency market in 2022, first in September and again in October, to prop up the yen.

Earlier in the day, Japan’s top currency diplomat Masato Kanda said recent yen moves were rapid and that he would not rule out any steps.

But Suzuki and Kanda both declined to say whether the yen’s overnight falls were deemed excessive and did not escalate his warning to take “decisive action” against sharp yen declines.

“I don’t have any particular (dollar/yen) level in mind but excessive volatility has a negative impact on the economy,” Kanda, who is vice finance minister for international affairs, told reporters.

“Recent moves are rapid. We’d like to respond appropriately to excessive moves, without ruling out any options,” he said.

“We are always prepared to respond to any situation,” Kanda said when asked whether authorities were preparing to intervene in the currency market to prop up the yen.

“Compared with 2022 when Japan intervened to stem a weak yen that broke past 145 to the dollar, Japanese authorities seem to lack determination to defend the yen this time around,” Masafumi Yamamoto, chief FX strategist at Mizuho Securities, said.

“Given that the dollar’s strength reflects a solid U.S. economy and interest rate differentials between Japan and the United States are wide open, Japanese authorities may feel it would be useless even if they intervene now.”

(Reporting by Satoshi Sugiyama, Yoshifumi Takemoto, Makiko Yamazaki and Tetsushi Kajimoto; Writing by Leika Kihara; Editing by Himani Sarkar and Sam Holmes)