TOKYO (Reuters) – Japanese Finance Minister Shunichi Suzuki said on Friday that “speculative” moves were behind the yen’s recent decline, suggesting authorities remained on standby to intervene in the market to deal with any excessive decline in the currency.
Suzuki also said that authorities are monitoring the speed, not the level, of the yen’s movement. He repeated recent warnings from Tokyo that authorities would not rule out any steps in response to the currency’s erratic movements.
“Given that the yen’s decline continues despite the narrowing of the interest rate gap, albeit modestly, it can be assumed that there are speculative movements in the market,” Suzuki told parliament.
“It is important that exchange rates move steadily, reflecting fundamental factors. Excessive volatility is undesirable, and we monitor market movements from this point of view,” he said.
With the Bank of Japan’s policy rate still hovering near zero, expectations that the gap between U.S. and Japanese interest rates will remain wide is giving traders a reason to continue selling the yen, analysts said.
The yen has been in a downtrend since the Bank of Japan’s decision last week to end eight years of negative interest rates and scale back its sweeping stimulus program.
The Japanese currency hit a 34-year low against the dollar this week at 151.975 as markets interpreted dovish forecasts from the Bank of Japan as suggesting rate hikes would be slow going forward. On Friday, it recovered some losses and settled at 151.35.
Japanese policymakers have historically favored a weak yen because it helps boost profits for the country’s big producers.
But the yen’s sharp fall recently has added to Tokyo’s headaches by inflating the cost of raw material imports, hurting consumption and retail profits.