JAPAN may have to take action against any disorderly, speculative-driven foreign exchange moves, the government’s top currency diplomat Masato Kanda said on Tuesday, reinforcing Tokyo’s readiness to intervene again to support a fragile yen.
“It is preferable for exchange rates to remain in a stable manner following fundamentals, and if the market is functioning soundly in this way, there is of course no need for the government to intervene,” Kanda, Japan’s vice-minister of finance for international affairs, told reporters.
“However, when there are excessive fluctuations or disorderly movements due to speculation, the market is not functioning and the government may have to take appropriate action. We will continue to take the same firm approach as we have in the past.”
Tokyo is suspected to have intervened on at least two separate days last week to support the yen after it tumbled to lows last seen more than three decades ago.
Bank of Japan data suggested authorities spent more than 9 trillion yen (S$79 billion) in defence of its currency, helping lift the yen from a 34-year low of 160.245 per dollar to a roughly one-month high of 151.86 over the span of a week.
The yen was last trading around 154.27 in early Asia.
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Kanda said it is normal practice for a currency authority to not comment on whether it has carried out market intervention, when asked about recent speculations that Japan has conducted yen-buying interventions.
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.
Kanda also noted that a number of countries in addition to Japan had expressed serious concerns about foreign exchange market volatility in a meeting leading up to a Asean+3 finance ministers and central bank governors conference in the Georgian capital Tbilisi last week.
Asean+3 groups the 10-member Association of Southeast Asian Nations (Asean) as well as Japan, China and South Korea.
“The current concerns are not confined to Japan,” Kanda said. REUTERS
