World Economy

Japan Says Will Intervene on Excessive Volatile Yen Rise

Japan Says Will Intervene on Excessive Volatile Yen Rise
Japan Says Will Intervene on Excessive Volatile Yen Rise

Japanese Finance Minister Taro Aso said on Monday that Tokyo is ready to intervene in the currency market if yen moves are volatile enough to hurt the country’s trade and economy.

Aso also said he did not think the United States considered Japan’s currency policy to be inappropriate, but acknowledged the two countries differed in their views on what would be deemed excessive yen rises that justify intervention, Reuters reported.

“For Japan, excessive volatility in yen moves that affect Japan’s trade, economic and fiscal policies—be it yen rises or yen falls—is undesirable. If such moves occur, Japan is ready to intervene in the market,” Aso told parliament.

The dollar hit an 18-month low of 105.55 yen last week after the United States added Japan to a list of countries it was monitoring over foreign exchange policies.

Some investors interpreted the move as a warning to Tokyo against conducting yen-selling market intervention. The dollar regained some ground to hover above 107 yen in Asia on Monday.

Japanese policymakers sought to gain informal consent to act against an unwelcome yen rise during a G-20 finance leaders’ gathering in Washington late last month.

  Coordination With US

But the United States offered a cool response with Treasury Secretary Jack Lew describing yen moves as “orderly” a day after Aso conveyed to him Toyko’s strong concern over what it saw as “one-sided” yen rises.

Aso said Japanese and US policymakers had frequent phone conversations on exchange rates, particularly when the Japanese currency gained 5 yen in two days last month.

“If the yen was gaining 5 yen in two days, it might gain 10 yen in four days. That would be too excessive and if such trend continued, it would be the kind of excessive currency volatility that G-20 nations agreed was undesirable,” Aso said.

“The US side, on the other hand, argued that it was still a 5-yen rise” and so did not meet the threshold for currency action, Aso said.

Meanwhile, a Reuters poll shows Japan’s economy is expected to have barely grown in the first quarter, as stagnant consumer spending and wobbly financial markets keep expectations for more government stimulus measures alive.

The gross domestic product was seen to have expanded at an annualized rate of 0.2% in January-March, according to the poll of 19 analysts, after a 1.1% contraction in October-December.

That would translate into a quarterly expansion of 0.1%, the poll showed, following a 0.3% decline in the final quarter last year.