Japan's Finance Minister, Shunichi Suzuki, highlighted concerns over speculative trends in the currency market, emphasizing that these movements do not align with the economic fundamentals. He reiterated a warning about the negative impact of excessive declines in the yen's value.
Suzuki expressed the government's readiness to take decisive actions to stabilize the yen, ensuring that all options are on the table to counter unwarranted volatility in the currency market.
Factors such as the Bank of Japan (BOJ)'s shift away from negative interest rates, Japan's current account status, market sentiment, and geopolitical risks are influencing currency dynamics, according to Suzuki.
Despite the BOJ ending eight years of negative interest rates on March 19, the yen continued to weaken, reaching a 34-year low against the dollar last week. This downtrend persists, partially due to the anticipation that the interest rate gap between the U.S. and Japan will remain significant, encouraging further sales of the yen.
Suzuki refrained from commenting on whether the yen's sharp decline post-BOJ's policy change met or exceeded his expectations. He stressed the importance of currency rates reflecting economic fundamentals and criticized excessive volatility.
The yen saw a slight recovery following an emergency meeting by Japanese monetary authorities, which aimed to address the currency's weakness and issued a stern warning against further declines. Japan has intervened in the currency market twice in 2022 to halt the yen's slide.
