Japan labels yen moves ‘speculative’, hints at possible intervention | Wilnesh News

Japanese Finance Minister Shuni Suzuki said on Friday there was “speculation” behind recent moves. JPY The decline shows that authorities are still ready to intervene in the market to solve the problem of excessive currency decline.

Suzuki also said the authorities were focusing on the speed of the yen’s movements rather than the level of the exchange rate. He reiterated Tokyo’s recent warning that authorities would not rule out any measures to combat disorderly currency swings.

“Despite narrowing interest rate differentials, the yen continues to fall, albeit modestly, indicating speculation in the market,” Suzuki told parliament.

“It is very important for currency exchange rates to stabilize and fluctuate, which reflects fundamentals. Excessive volatility is not advisable and we are observing market trends from this perspective,” he said.

With the Bank of Japan’s policy rate remaining around zero, expectations that the gap between U.S. and Japanese interest rates will continue to widen provide traders with an excuse to continue selling the yen, analysts said.

The yen has been on a downward trend since the Bank of Japan decided last week to end eight years of negative interest rates and roll back its aggressive stimulus program.

The yen hit a 34-year low of 151.975 against the dollar this week as markets interpreted the Bank of Japan’s dovish guidance as signaling that future interest rate hikes would be slow. It regained some of its losses on Friday to 151.35.

Japanese policymakers have historically favored a weaker yen because it helps boost profits for the country’s big manufacturers.

But a sharp fall in the yen has recently added to Tokyo’s headaches, with raw material import costs rising, hurting consumption and retail profits.