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Japanese Ruling Party Official Signals Potential Intervention as Yen Nears 160 Against Dollar

In a recent interview with Reuters, Takao Ochi, a senior official from Japan’s ruling party, indicated that policymakers may consider taking action as the yen approaches the 160 level against the dollar. While no concrete intervention thresholds have been established, Ochi emphasized that a further slide in the yen’s value could prompt policymakers to intervene in the currency market.

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As the secretary-general of the Liberal Democratic Party’s research commission on the finance and banking systems, Ochi stated that there has been limited active discussion within the party regarding appropriate yen levels for potential intervention. However, he suggested that if the yen continues its decline towards 160 or even 170 against the dollar, policymakers may view such movements as excessive and warranting action.

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Ochi noted that while a weak yen has both benefits and drawbacks for the Japanese economy, the recent slide has largely been influenced by the significant interest rate differential between Japan and the United States. He emphasized the need for careful evaluation of the impact of yen weakness before considering any intervention measures.

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The yen’s recent decline to a 34-year low near 155 yen against the dollar has raised concerns among Japanese authorities about the possibility of currency intervention. Japanese Finance Minister Shunichi Suzuki recently issued a stern warning about the potential for intervention, indicating that discussions with U.S. and South Korean counterparts had set the stage for Tokyo to act against excessive yen movements.

Since the beginning of the year, the yen has depreciated by approximately 9% against the dollar. Currency intervention decisions in Japan are typically politically charged, with the last intervention occurring in 2022 to support the yen amidst public discontent over its weakness and its impact on living costs.

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