By Makiko Yamazaki and Takaya Yamaguchi
TOKYO (Reuters) – Japan’s top currency diplomat warned on Monday against speculative moves in the currency market as the yen falls below 149 per dollar.
“We will monitor movements in the foreign exchange market, including speculative trading, with a sense of urgency,” Atsushi Mimura told reporters, reviving a verbal warning tactic often used by his predecessor, Masato Kanda.
Mimura declined to comment on the specifics of the current market situation.
In addition, Katsunobu Kato, the country’s newly appointed finance minister, said the government would monitor how rapid currency fluctuations could affect the economy and take action if necessary.
“The government will consider what action to take while monitoring the consequences,” Kato said in an interview with a small group of reporters on Monday.
The yen fell to 149.10 against the dollar in early trading on Monday, its weakest since August 16, after a surprisingly strong US jobs report for September prompted traders to lower their bets that the Federal Reserve would make further big interest rate cuts.
Japan last carried out a yen-buying intervention in late July to support its currency after it fell to a 38-year low below 161 per dollar.
The yen has also been under pressure since new Japanese Prime Minister Shigeru Ishiba stunned markets when he said the economy was not ready for further rate hikes, a sharp reversal from his earlier support for the Bank of Japan’s waning decades of loose monetary policy.
In Monday’s interview, Kato said the government would leave specific policy steps to the Bank of Japan (BOJ), when asked whether the policy rate should be kept at 0.25%.
“The government hopes that the BOJ will communicate thoroughly with the markets and implement appropriate policies to achieve its 2% inflation target in a stable and sustainable manner,” he said.
The BOJ made its first rate hike in 17 years in March, arguing that the pace of price and wage increases showed Japan was finally shaking its entrenched deflationary mindset. The central bank unexpectedly raised interest rates again in July, causing a stir in domestic markets.
