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HomeCurrenciesJapan's Finance Minister Warns Against Speculative Currency Moves Impacting Yen
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Japan’s Finance Minister Warns Against Speculative Currency Moves Impacting Yen

Japanese Finance Minister Shunichi Suzuki reiterated concerns on Monday regarding speculative movements in the currency market, emphasizing that such actions do not align with underlying economic fundamentals. He cautioned against excessive declines in the yen and stated that appropriate measures would be taken to address such movements.

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Suzuki emphasized the government’s vigilant monitoring of currency market developments and its commitment to responding effectively to unwarranted fluctuations. He underscored the need for stability in currency rates reflective of economic fundamentals, highlighting the undesirability of excessive volatility.

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Various factors, including the Bank of Japan’s recent decision to terminate negative interest rates after eight years, Japan’s current account balance, price movements, geopolitical risks, and market sentiment, contribute to currency fluctuations, according to Suzuki. He suggested that recent declines in the yen may be driven by speculative trading rather than fundamental economic indicators.

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Despite the Bank of Japan’s policy rate remaining near zero, the yen has experienced a downward trend, reaching a 34-year low against the dollar last week. Suzuki noted that the gap between U.S. and Japanese interest rates could be contributing to this trend, providing traders with reasons to continue selling the yen.

Suzuki refrained from commenting on whether the sharp decline in the yen following the Bank of Japan’s exit from negative interest rates had been anticipated. However, he stressed the importance of stable currency movements in line with economic fundamentals.

Following an emergency meeting convened by Japanese monetary authorities last Wednesday to address the weakening yen, the currency has shown signs of recovery. This meeting, held a day earlier than scheduled, resulted in a strong warning against excessive yen depreciation.

In 2022, Japan intervened in the currency market twice, in September and October, as the yen approached 152 to the dollar. The authorities’ intervention aimed to counteract rapid yen depreciation and stabilize currency rates.

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