Japanese Finance Minister Shoichi Suzuki said on Friday that there are “speculative” movements behind the recent yen declines, indicating that authorities are still prepared to intervene in the market to address any excessive currency depreciation. He also stated that authorities are monitoring the speed of yen movements, not just their levels. Tokyo’s recent warnings reiterated that authorities will not rule out taking any steps to respond to unregulated currency movements.
Suzuki told parliament, “Considering the continued yen declines despite narrowing interest rate differentials, even modestly, this indicates speculative movements in the market, and it is important for currency prices to move stably, reflecting fundamentals. Excessive fluctuations are undesirable, and we are monitoring market movements from this perspective.”
With the Bank of Japan keeping interest rates around zero, analysts say expectations that the gap between US and Japanese interest rates will remain wide give traders a reason to continue selling the yen. The yen has been on a downward trend since the Bank of Japan’s decision last week to end eight years of negative interest rates and retreat from its radical stimulus program.
Japanese policymakers have historically preferred a weak yen because it helps boost profits for major manufacturing companies in the country. However, the recent sharp decline in the yen has led to increased troubles for Tokyo due to inflated costs of importing raw materials, harming consumption and retail profits.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
