Japan’s top currency diplomat Masato Kanda, who will instruct the BoJ to intervene when it deems necessary, said on Friday that the recent move in the Japanese Yen (JPY) is a quick one and that he will take appropriate measures in the foreign exchange (FX) market if necessary.
Key quotes
The recent movements of the yen are somewhat rapid.
Will take appropriate measures in the foreign exchange market if necessary.
He did not comment on whether he intervened in the foreign exchange market.
I cannot think whether government officials have commented on the intervention in the foreign exchange market.
The yen has moved 5% in the last month, which is significant.
It is natural to think that recent movements in the currency market were driven by speculators.
A weak yen increases import costs, which would harm people’s lives.
It is undesirable if excessive movements in the currency market caused by speculators harm people’s lives.
Market reaction
At the time of writing, USD/JPY was trading at 158.87, gaining 0.02% on the day.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is determined broadly by the performance of the Japanese economy, but more specifically by the policy of the Bank of Japan, the spread between Japanese and US bond yields, and risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key to the Yen. The BoJ has intervened directly in currency markets on occasion, usually to lower the value of the Yen, although it often refrains from doing so due to political concerns of its major trading partners. The BoJ’s current ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its major currency peers. This process has been exacerbated more recently by a growing policy divergence between the BoJ and other major central banks, which have opted to sharply raise interest rates to combat decades-old levels of inflation.
The Bank of Japan’s stance of maintaining an ultra-loose monetary policy has led to an increase in policy divergence with other central banks, in particular with the US Federal Reserve. This favours the widening of the spread between US and Japanese 10-year bonds, which favours the Dollar against the Yen.
The Japanese Yen is often considered a safe haven investment. This means that in times of market stress, investors are more likely to put their money into the Japanese currency due to its perceived reliability and stability. In turbulent times, the Yen is likely to appreciate against other currencies that are considered riskier to invest in.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
