Yen weakens past 141 to the dollar after minister warns of volatility
TOKYO (Reuters) – Japan’s Finance Minister Shunichi Suzuki reiterated on Tuesday that sharp moves in the yen were “undesirable” and that he was watching rising volatility in the foreign exchange market with a “great sense of urgency” as that the currency was hitting a new 24-year low.
It was Suzuki’s last verbal warning on the currency, but it wasn’t considered as strong as comments made in July, when a drop past 139 to the dollar prompted him to tell himself “concerned”. Suzuki’s comments on Tuesday came before the yen hit the new low.
The yen weakened past 141 yen to the dollar on Tuesday for the first time since 1998, last trading at 141.17 to the dollar. It has fallen by more than 20% since the start of the year, on divergent monetary policies between Japan and the United States.
While the Bank of Japan has pledged to stick with strong monetary stimulus to support a fragile economy, the Federal Reserve is expected to continue raising rates for the time being.
“It is important that currencies move in a stable manner, reflecting economic fundamentals,” Suzuki told Finance Ministry reporters.
When pressed to comment on the impact of a weak yen on the economy, Suzuki said that “a weak yen has both advantages and disadvantages, but sudden moves are not desirable.”
Suzuki said on Friday that Tokyo would take “appropriate” action if needed after the yen hit its lowest level in more than two decades last week.
Some analysts said Suzuki’s failure to use the word “concerned” then suggested that intervention in the currency market may not be imminent.
“Intervention might be technically possible but it’s politically difficult to sell dollar at a time when the United States is struggling with inflation,” said Daisaku Ueno, chief currency strategist at Mitsubishi UFJ Morgan Stanley Securities.
“Maybe that’s one reason why the minister toned down the verbal warning a bit.”
Japan last intervened by selling the dollar and buying the yen in the foreign exchange market in June 1998, when the yen fell below 146 against the US currency.