Japan's leading currency authority has issued a stern warning against speculative trading in the foreign exchange market, emphasizing the government's preparedness to intervene if necessary. This stance comes amid concerns over the yen's recent performance, which officials believe does not reflect economic fundamentals but is rather influenced by speculative activities.
The yen saw a slight appreciation against the dollar immediately following the comments, moving from 151.40 to 151.10. This reaction underscores the market's sensitivity to potential government intervention, a strategy Japan has not shied away from in the past to manage its currency's value.
This recent cautionary statement marks the first of its kind since February from Masato Kanda, the vice finance minister for international affairs, and represents his most significant remarks on the currency in recent months. The yen's valuation has hovered around the 150-151 per dollar range, especially after the Bank of Japan's decision last week to increase interest rates for the first time since 2007. Despite this adjustment, Bank Governor Kazuo Ueda has indicated that the financial environment will maintain its accommodative stance.
In 2022, Japan took direct action in the forex market to support the yen when it weakened to 151.95 against the dollar, showcasing its willingness to curb excessive volatility.
Momoka Yokoyama contributed to this report.
