Japan could intervene in the foreign exchange market “anytime” to prevent the yen from plunging further, a senior Finance Ministry official said Thursday, hours after the currency hit a 24-year low against the US dollar.
“We cannot accept excessive movements” in the currency market, which would drag down the household and corporate sectors, said Masato Kanda, Japan’s top currency diplomat, adding, “We are fully ready” to take all options to stem the yen’s abrupt depreciation.
Kanda, however, added the Japanese government has not stepped into the foreign exchange market recently. The comments by Kanda did not have an immediate impact on the market.
His remarks came after the Bank of Japan on Thursday maintained its ultralow rate policy as widely expected to prop up the pandemic-hit economy, sticking to a dovish stance despite the yen’s sharp decline in a global policy-tightening wave to tackle inflation.
On Wednesday, the US Federal Reserve raised its benchmark policy rate by 0.75 percentage point to combat surging inflation, consolidating the view among market participants that the interest rate gap between the United States and Japan will widen further.
The US dollar rose above the 145 yen line in Tokyo trading Thursday, its highest level since 1998, before Kanda made the comments.
A falling yen usually shores up exports by making Japanese products cheaper abroad and increases the value of overseas revenues in yen terms, but it drives up import prices. Japan depends on imports for more than 90 percent of its energy needs.
Japan’s core consumer prices soared 2.8 percent to a nearly eight-year high in August, government data showed Tuesday, in the latest sign of cost-push inflation without wage growth.
Bank of Japan maintains ultralow rate policy despite sharp yen slide