Japanese Finance Minister Shunichi Suzuki reiterated on Tuesday that sharp movements in the yen were “undesirable” and that he was watching the growing volatility in the foreign exchange market with a “great sense of urgency” as the currency hit a low. new low of 24 years.
It was Suzuki’s last verbal warning on the currency, but it wasn’t considered as strong as comments made in July, when a drop past 139 to the dollar prompted him to tell himself “concerned”. Suzuki’s comments on Tuesday came before the yen hit the new low.
The yen weakened past 141 yen to the dollar on Tuesday for the first time since 1998, last trading at 141.17 to the dollar. It has fallen by almost 20% since the start of the year, due to divergent monetary policies between Japan and the United States.
While the Bank of Japan has pledged to stick with strong monetary stimulus to support a fragile economy, the Federal Reserve is expected to continue raising rates for the time being.
“It is important that currencies move in a stable manner, reflecting economic fundamentals,” Suzuki told Finance Ministry reporters.
When pressed to comment on the impact of a weak yen on the economy, Suzuki said that “a weak yen has both merit and demerit, but sudden moves are undesirable.”
Suzuki said on Friday that Tokyo would take “appropriate” action if needed after the yen hit its lowest level in more than two decades last week.
Some analysts said Suzuki’s failure to use the word “concerned” then suggested that intervention in the currency market may not be imminent.
“An intervention might be technically possible, but it’s politically difficult to sell the dollar at a time when the United States is struggling with inflation,” said Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley Securities.
“Maybe that’s one reason why the minister toned down the verbal warning a bit.”
Japan last intervened by selling the dollar and buying the yen in the foreign exchange market in June 1998, when the yen fell below 146 against the US currency.
(This story has been updated to correct the movement of the yen against the dollar since the beginning of the year in paragraph 3)