(1) Japanese Finance Minister Shunichi Suzuki said that he would not rule out any measures to deal with the weakening of the yen. This is his latest warning to speculators. Japan said a historic goodbye to years of accommodative policy last week and is now in a delicate period.
(2) Suzuki said on Tuesday that a weak yen has both positive and negative effects on the economy, but excessive fluctuations in the exchange rate will bring uncertainty to business operations, which in turn will hurt the economy.
(3) This echoes the concerns of the finance officer of the Japanese Ministry of Finance the day before, and also reinforces the Japanese government's concern about the speed of market volatility rather than the specific level of the exchange rate.
(4) "I don't like to see the exchange rate fluctuating rapidly," Suzuki told reporters after a cabinet meeting. "It's important that the exchange rate is stable and reflects economic fundamentals. ”
(5) The Bank of Japan made a landmark decision last week, ending eight years of negative interest rate policy and ushering in a new era of monetary policy tightening. Since then, the yen has accelerated its decline.
(6) However, Japan's first interest rate hike since 2017 has been fully priced in by the market in advance, triggering a typical "sell fact" decline in the yen. Crucially, the market expects the Bank of Japan to raise interest rates only modestly in the coming months, which means that the interest rate differential between Japan and the United States will remain very pronounced for some time to come, which has boosted the morale of the yen bears.
(7) A weaker yen will boost the profits of Japanese exporters, but it will also raise import costs and squeeze household wealth. Policymakers are particularly sensitive to factors that threaten consumption, as they undo years of efforts to create a virtuous cycle of demand-led price increases and economic growth.
(8) USDJPY edged lower at 151.26 in Tuesday afternoon trading, facing significant resistance as Japanese authorities threatened to intervene. Since the beginning of the year, the dollar has risen about 7% against the yen. Makoto Noji, chief market strategist at Japan's SMBC Nikko Securities, said: "I wouldn't be surprised if the yen fell below 152 yen and the Japanese authorities intervened in the currency market. ”
(9) Shunichi Suzuki did not comment on the possibility of the authorities intervening in the currency market to prevent the yen from depreciating, but said that the speed of exchange rate fluctuations will be a factor in deciding whether to intervene "If I answer a question about foreign exchange market intervention, it may have an unexpected impact on the market," he added, adding that "if there is excessive volatility, we will respond appropriately and do not rule out any measures"
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Japan said it would not rule out taking any measures to curb the yen's depreciation
(1) Japanese Finance Minister Shunichi Suzuki said that he would not rule out any measures to deal with the weakening of the yen. This is his latest warning to speculators. Japan said a historic goodbye to years of accommodative policy last week and is now in a delicate period. (2) Suzuki said on Tuesday that a weak yen has both positive and negative effects on the economy, but excessive fluctuations in the exchange rate will bring uncertainty to business operations, which in turn will hurt the economy. (3) This echoes the concerns of the finance officer of the Japanese Ministry of Finance the day before, and also reinforces the Japanese government's concern about the speed of market volatility rather than the specific level of the exchange rate. (4) "I don't like to see the exchange rate fluctuating rapidly," Suzuki told reporters after a cabinet meeting. "It's important that the exchange rate is stable and reflects economic fundamentals. ” (5) The Bank of Japan made a landmark decision last week, ending eight years of negative interest rate policy and ushering in a new era of monetary policy tightening. Since then, the yen has accelerated its decline. (6) However, Japan's first interest rate hike since 2017 has been fully priced in by the market in advance, triggering a typical "sell fact" decline in the yen. Crucially, the market expects the Bank of Japan to raise interest rates only modestly in the coming months, which means that the interest rate differential between Japan and the United States will remain very pronounced for some time to come, which has boosted the morale of the yen bears. (7) A weaker yen will boost the profits of Japanese exporters, but it will also raise import costs and squeeze household wealth. Policymakers are particularly sensitive to factors that threaten consumption, as they undo years of efforts to create a virtuous cycle of demand-led price increases and economic growth. (8) USDJPY edged lower at 151.26 in Tuesday afternoon trading, facing significant resistance as Japanese authorities threatened to intervene. Since the beginning of the year, the dollar has risen about 7% against the yen. Makoto Noji, chief market strategist at Japan's SMBC Nikko Securities, said: "I wouldn't be surprised if the yen fell below 152 yen and the Japanese authorities intervened in the currency market. ” (9) Shunichi Suzuki did not comment on the possibility of the authorities intervening in the currency market to prevent the yen from depreciating, but said that the speed of exchange rate fluctuations will be a factor in deciding whether to intervene "If I answer a question about foreign exchange market intervention, it may have an unexpected impact on the market," he added, adding that "if there is excessive volatility, we will respond appropriately and do not rule out any measures"