Japan warns against excessive volatility as yen slides near fresh lows

Japanese Finance Minister Shunichi Suzuki said authorities won't rule out any options in dealing with excessive yen moves, repeating his warning that Tokyo is ready to act against the currency's recent sharp declines.
 

But he stopped short of describing the yen falls as excessive.
 

"We don't look at currency levels in judging whether the moves are desirable or not. It's important for currency rates to move stably reflecting fundamentals," Suzuki told a press conference on Tuesday, when asked about the yen's slide near the psychologically important 152 level against the dollar.
 

"We are watching exchange-rate moves closely with a high sense of urgency and won't rule out any options" in dealing with excessive moves, he added.
 

The yen briefly hit 151.840 to the dollar on Monday, within striking distance of the 34-year low of 151.975 marked last month and approaching the 152 line seen by traders as heightening the chance of intervention by Japanese authorities.
 

"If you look at the yen's level and its underlying move with signs of speculation, it wouldn't surprise me if authorities intervened any time," Takehiko Nakao, Japan's former currency diplomat, told Reuters on Monday.
 

The yen has been declining since the Bank of Japan's historic policy shift last month that ended eight years of negative interest rates, as markets interpreted its dovish guidance as a sign further rate hikes will be some time away.
 

BOJ Governor Kazuo Ueda's remarks last week signalling the chance of another rate hike this year have failed to arrest the yen's declines, as markets focus on the likelihood that U.S. and Japanese interest rate differentials will remain wide.
 

Japan intervened in the currency market in 2022, first in September and again in October, to prop up the yen as the currency slid towards 152 to the dollar.
 

Japanese policymakers have historically favoured a weak yen as it helps boost profits for the country's big manufacturers.

But the yen's recent sharp declines are raising concerns for policymakers as they inflate the cost of raw material imports, hurting consumption and retail profits.
 

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