Image: Reuters Berita 24 English - Japan's government and central bank issued a rare joint statement on Friday expressing worry over rec...
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| Image: Reuters |
Berita 24 English - Japan's government and central bank issued a rare joint statement on Friday expressing worry over recent severe declines in the yen. This is the strongest indication to date that Tokyo may intervene to stabilise the currency, which has fallen to 20-year lows.
Masato Kanda, a top currency diplomat, told reporters after a meeting with his Bank of Japan (BOJ) counterpart that Tokyo will "react flexibly with all alternatives on the table."
He declined to comment on whether Tokyo may engage with other nations to enter the market jointly.
The G7, of which Japan is a member, has a long-standing policy that currency rates should be determined by the market, but that the group would communicate closely on currency movements, and that excessive and disorderly exchange-rate fluctuations could be detrimental to economic progress.
The Ministry of Finance, the Bank of Japan, and the Financial Services Agency said in a joint statement made following their executives' meeting, "We are concerned about recent currency market movements due to severe yen losses."
Officials from the three organizations gather from time to time, typically to communicate to the markets their alarm over sudden market fluctuations. However, it is uncommon for them to release an united statement with clear currency warnings.
The dollar dropped 0.70 percent to 133.41 yen in response to the statement.
Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, remarked, "The yen's depreciation has occurred at a quick speed over the past week, so the yen's blustering was likely amplified."
He stated, "I don't believe Tokyo will execute yen-buying intervention because that requires U.S. approval."
In contrast to other major central banks that are signalling aggressive interest rate hikes to combat inflation, the BOJ has repeatedly pledged to keep rates low, making Japanese assets less attractive to investors and bringing the yen to within striking distance of the January 31, 2002 low of 135.20. This would be the lowest level since October 1998.
