By Kentaro Sugiyama
TOKYO (Reuters) – Japanese authorities could intervene in the currency market at any time as the yen’s recent declines are excessive and not in line with fundamentals, ruling party director Satsuki Katayama told Reuters.
The dollar/yen has risen from around 140 at the start of this year to almost 155, which could be described as excessive volatility, said Katayama, acting chairman of the Liberal Democratic Party’s (LDP) policy research council.
“I don’t think Japan will face any criticism if it were to act now,” Katayama said in an interview on Monday, when asked about the timing of a possible currency intervention by Japanese authorities to support the yen.
Japanese authorities could have intervened around the time of last week’s meeting of G7 financial leaders in Washington, said Katayama, who has experience working at the Treasury Department.
Although authorities have taken no action so far, they are likely exploring the best timing to maximize the impact of currency intervention, she said.
Katayama said the Bank of Japan should not rush to raise rates again given uncertainty about the global economic outlook.
A broad rally in the dollar, driven by declining market expectations of a near-term US interest rate cut, has pushed the yen to a 34-year low, raising the possibility of currency intervention by Japanese authorities.
The dollar stood at 154.85 yen, approaching the 155 level seen by traders as the line in the Tokyo sand that could prompt the dollar to enter the market.
