HomeForexJapan cautions against sudden, speculative yen depreciation, emphasizing stability and discouraging excessive...

Japan cautions against sudden, speculative yen depreciation, emphasizing stability and discouraging excessive fluctuations.

Japan Warns Against Rapid Yen Falls

Japanese Officials Warn Against Speculative Yen Moves

Japan’s top currency officials issued a warning against rapid and speculative yen moves overnight, expressing concern over the negative impact on the trade-reliant economy. The Japanese currency broke past 150 yen, prompting the officials to voice their apprehensions.

Dollar Rises as U.S. Inflation Surges

The dollar surged to three-month peaks following a report that U.S. inflation rose more than expected in January. This reinforced expectations that the Federal Reserve would maintain interest rates at their current levels in March, leading to increased pressure on the yen.

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Finance Minister’s Concerns

Finance Minister Shunichi Suzuki expressed his concern over the rapid movements in the market, emphasizing that such fluctuations are undesirable for the economy. He stated that the situation is being closely monitored.

Japan’s Stance on Currency Intervention

Japan’s top currency diplomat Masato Kanda assured that the nation would take appropriate actions in the foreign exchange market if necessary. He emphasized the negative impact of rapid currency movements on the economy and stressed the importance of taking suitable measures to address the situation.

Market Speculation and Intervention History

Market players have been speculating about the future pace of the Fed rate cuts and the timing of the Bank of Japan’s exit from the negative interest rates policy. Japan intervened in the currency market three times in 2022 when the yen plunged to 32-year lows near 152 yen to the dollar, conducting rare dollar-selling, yen-buying intervention.

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Japan’s Stance on Currency Levels

Authorities clarified that they are not targeting specific currency levels but are comprehensively considering various factors, including the rapidity of movements and their deviation from fundamentals. This approach aims to address the situation effectively and maintain stability in the market.

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