Japan says U.S. showed understanding on Tokyo’s currency intervention

Japan says U.S. showed understanding on Tokyo’s currency intervention
Japan says U.S. showed understanding on Tokyo's currency intervention
© Reuters

By Tetsushi Kajimoto

TOKYO (Reuters) -Japanese Finance Minister Shunichi Suzuki said on Tuesday the United States showed understanding to “a certain extent” on Tokyo’s currency market intervention last month, giving Japan’s first public indication of U.S. backing for the move.

Japanese authorities sold dollars and bought yen in a market intervention for the first time in 24 years, spending 2.8 trillion yen ($19.21 billion) to slow a rapid slide in the yen that it considered a threat to the economy.

While Japanese officials have said they do not necessarily need U.S. consent for action in the currency markets, they repeatedly stress the importance of seeking U.S. understanding, which is seen as lending them legitimacy.

At meetings of the G7 and G20 nations, Suzuki said, he has explained Japan’s concern about the potential damage from sharp dollar/yen moves and reaffirmed past G7 agreements on the exchange market.

“I’ve been continuing to make such efforts and we have gained a certain extent of understanding from the U.S. authorities towards our latest intervention,” he told reporters.

“Our stance remains unchanged that we will take appropriate steps in case of excess volatility from now on as well.”

Market players had expected Japan might find it difficult to secure U.S. understanding for currency intervention, given Treasury Secretary Janet Yellen’s firm belief in market-determined exchange rates and the U.S. commitment to battle inflation via monetary tightening, which has fuelled the dollar’s rise.

While Japan’s intervention briefly halted the dollar’s relentless rise against the yen, the U.S. currency has since resumed its climb and was hovering around 145.75 yen in Tuesday afternoon trade in Asia, just below a 24-year high of 145.90 that preceded the Sept. 22 intervention.

“It’s true the current market is reflecting the dollar’s solo strength,” Suzuki said, adding that he was carefully watching currency market moves with a “strong sense of urgency”.

Suzuki, who took office a year ago, said he would explain Japan’s recent intervention to financial leaders from the Group of 20 major economies when they gather this week in Washington, where he expected discussions within the context of how monetary tightening could affect the global economy.

Japan’s top currency diplomat, Masato Kanda, also weighed in on Tuesday on the topic of potential currency intervention, saying that authorities were always ready to take necessary steps against excess currency volatility, according to broadcaster TBS.

Kanda was quoted as telling reporters that he could make a decision on currency intervention anywhere, including from an airplane.

($1 = 145.7400 yen)

Leave a Reply

Your email address will not be published. Required fields are marked *

New Brokers
2.8 rating
Buy & sell Crypto in minutes
3.0 rating
Note: Investing involves risks. You can lose your deposit. We advise you to only invest in financial products which match your knowledge and experience.
2.0 rating
Interactive Brokers attracts active traders with low per-share pricing, an advanced trading platform.
4.3 rating
eToro is the world’s leading social trading platform, with thousands of options for traders and investors.
Risk Warning: The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory or other services by AdonFinance. In addition, the content of the website offers no opinion with respect to the suitability of any security or any specific investment. Trading foreign exchange, stocks, cryptocurrencies and commodities is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against traders. Before any investment with any broker you need to carefully consider your targets, previous experience, and risk level. Forex trading can result in the loss of your money, as a result, you are expressly cautioned that you should never invest or trade with money that you cannot afford to lose. For the avoidance of doubt, AdonFinance's service provides Brokers reviews in the Financial market. AdonFinance, its subsidiaries, agents or affiliates will assume no responsibility whatsoever for your trading activity. © Copyright 2021 AdonFinance