Japan’s government has voiced significant concern regarding the recent rapid depreciation of the yen against the dollar, describing the currency movements as “alarming.” Senior officials signaled a readiness to intervene in the foreign exchange (forex) market if speculative activities continue to drive excessive volatility.
On Friday, the dollar surged to 157.93 yen, its highest level since July, following the Bank of Japan’s (BOJ) decision to maintain its ultra-low interest rates. The lack of clear signals from BOJ Governor Kazuo Ueda about potential rate hikes added pressure on the yen.
Finance Minister Katsunobu Kato, addressing reporters, said:
“We have been recently seeing one-sided and sharp moves. As we are alarmed by recent currency market developments, including those driven by speculators, we’ll take appropriate action against excessive moves.”
Such explicit remarks reflect a heightened level of concern from Japanese policymakers. Atsushi Mimura, Japan’s top currency diplomat, echoed these sentiments, reiterating the government’s preparedness to act if necessary.
The BOJ’s meeting concluded shortly after the U.S. Federal Reserve announced a rate cut while signaling caution regarding further easing in 2025. This divergence in monetary policies between Japan and the U.S. has widened interest rate differentials, adding to the yen’s downward pressure.
While Japan previously intervened in July when the yen fell below 161 per dollar, officials remain tight-lipped about future strategies. Mimura declined to comment on the U.S.-Japan rate gap or BOJ’s communication approach, maintaining a reserved stance on potential moves.
This development highlights growing challenges for Japan as it seeks to balance economic recovery with currency stability in an environment of global monetary tightening and shifting market dynamics.
