Japan warns against speculative movements on the yen

by Tetsushi Kajimoto and Leika Kihara

TOKYO/OSAKA (Reuters) – Japan is ready to react to moves in currency speculation, Japanese Finance Minister Shunichi Suzuki said on Monday.

This new warning comes after an intervention by the Japanese authorities last week on the foreign exchange market to support the yen, a first since 1998. The Japanese currency is suffering from the decision of the Bank of Japan (BoJ) to maintain its rates almost zero interest rate while the other major central banks, first and foremost the US Federal Reserve, are engaged in monetary tightening policies.

Speaking at a press conference in Tokyo, Shunichi Suzuki assured that the government and the Bank of Japan were on the same page regarding concerns over the sharp depreciation of the yen.

“We are deeply concerned by recent rapid and one-sided market developments, driven in part by speculative trading,” he said.

“Our view has not changed and we are ready to respond to such moves if needed,” he added.

BoJ Governor Haruhiko Kuroda said at a news conference in Osaka that the country’s central bank is likely to keep its ultra-accommodative monetary policy for the time being.

He added, however, that the bank’s commitment to keeping interest rates at “current or lower levels” would not necessarily stay that way for years, appearing to backtrack on his remarks last week that he saw a status quo on rates for “two to three years”.

“It won’t be as long as two to three years,” he said, noting that the bank’s strategy could change depending on how long it takes for the economy to fully recover from the global crisis. COVID-19.

Regarding last Thursday’s intervention in the foreign exchange market, Haruhiko Kuroda judged that it was appropriate to deal with the “rapid and unilateral” movements on the yen.

He rejected the idea that Japan was pursuing contradictory objectives by supporting the yen with interventions while driving its price down by keeping interest rates extremely low.

“Monetary policy and exchange rate policy have different objectives and effects,” he said.

The Japanese currency was trading Monday at 144 yen per dollar (-0.47%) against 140.31 Thursday after the intervention of the authorities on the foreign exchange market.

(Reporting Tetsushi Kajimoto in Tokyo and Leika Kihara in Osaka; written by Leika Kihara; French version Claude Chendjou, edited by Bertrand Boucey)

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