Japanese Finance Minister Katsunobu Kato raised alarms on Wednesday regarding currency speculation, citing concerns over the “one-sided, rapid” fluctuations in the market that have contributed to the yen’s decline.
“It is essential for currency rates to remain stable. We are closely monitoring exchange-rate movements, particularly for any signs of speculative trading,” Kato stated to reporters following the first session of the Group of 20 (G20) finance ministers’ meeting.
During Wednesday’s discussions, Kato noted that currency fluctuations were not addressed by G20 finance leaders and are unlikely to feature in Thursday’s follow-up session.
On the same day, the dollar surged above 153 yen for the first time in nearly three months, driven by robust U.S. economic data that lowered expectations for significant interest rate cuts by the Federal Reserve.
Japan last intervened in the currency market to buy yen in late July when the currency hit a 38-year low of over 161 per dollar.
While a weaker yen tends to benefit exporters, it has raised concerns among policymakers due to the increased costs of importing raw materials, which impacts households and retailers.
The Bank of Japan’s ongoing ultra-loose monetary policy, along with indications from Governor Kazuo Ueda that there will be no immediate moves to raise interest rates from their current near-zero levels, are viewed by the market as significant contributors to the yen’s weakness.
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