Japan’s top currency official said that recent yen weakness is odd and out of line with current economic fundamentals, reaffirming his commitment to act if needed to prevent excessive swings in the exchange rate.
“I strongly feel the recent sharp depreciation of the yen is unusual, given fundamentals such as the inflation trend and outlook, as well as the direction of monetary policy and yields in Japan and the US,” Japanese Vice Minister for International Affairs Masato Kanda said in an interview yesterday. “Many people think the yen is now moving in the opposite direction of where it should be going.”
Kanda’s remarks come amid intense market scrutiny over whether the government would step into the currency market to stem recent falls in the yen, following the Bank of Japan’s decision last week to raise interest rates for the first time since 2007. The currency slid to a 34-year low of ￥151.97 per US dollar on Wednesday, prompting Japanese Minister of Finance Shunichi Suzuki to increase verbal warnings, strongly hinting that Japan could intervene.
Photo: Bloomberg
Finance authorities also convened a three-way meeting, a gathering often used to show heightened concern among policymakers over market movements.
“We are currently monitoring developments in the foreign exchange market with a high sense of urgency,” Kanda said. “We will take appropriate measures against excessive foreign exchange moves without ruling out any options.”
Kanda reiterated the view that Japan is not guarding specific exchange rate levels, but is looking at the direction and speed of movements when assessing developments in the currency market, echoing Suzuki’s comments.
Japan had no defense line on exchange rates, Suzuki said when asked whether the ￥152 mark against the US dollar was a line in the sand.
Tokyo’s biggest intervention splurge was in 2022, after the yen approached 152, though the slide in that direction was much more rapid than currently seen.
Market participants try to gauge the proximity to possible market intervention from the language used by authorities.
“I am just saying what I think is right at the time,” Kanda said, referring to his choice of words.
Behind the yen’s weakness is the view among market players that the difference in policy rate and yields between Japan and its peers, including the US, would remain wide for some time.
Bank of Japan Governor Kazuo Ueda pledged to maintain an accommodative environment when the bank decided to raise its benchmark interest rate last week — ending the world’s last negative rate — pouring cold water on expectations that the bank would soon consider a second hike.
He favors a gradual process toward normalization, but keeping policy easy is not inconsistent with another rate hike, Bank of Japan board member Naoki Tamura said.
The Bank of Japan’s decision was a milestone that showed a virtuous price-wage cycle was in place, with sustainable inflation in sight, Kanda said, adding that strong wage gains during this year’s annual wage negotiations and record spending by companies were positive signs for Japan’s economy.
“Finally we are in an economic situation that enables the Bank of Japan to begin normalization,” Kanda said. “We have come a long way.”
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary
RSS