Finance Minister Satsuki Katayama said that Prime Minister Sanae Takaichi wasn¡¯t specifically highlighting the benefits of a weak yen over the weekend, in a move that suggested she was trying to preserve speculation over government intervention risks.
¡°She merely gave a textbook response on the yen and wasn¡¯t particularly emphasizing the merits of a weak yen,¡± Katayama told reporters Tuesday. She added that she agreed with Takaichi¡¯s stance that a weak yen has both pros and cons.
Katayama¡¯s remarks came after the prime minister said at an election rally on Saturday that a weak yen could present a major opportunity for export-oriented industries, cooling speculation that her government is poised to intervene to support the yen. The Japanese currency slid back to the ?155 per dollar level again on Monday following the comments, and was trading around ?155.50 per dollar Tuesday morning.
Takaichi also said the yen weakness has benefited the nation¡¯s Foreign Exchange Fund Special Account, which the government uses for purposes including currency intervention.
Takaichi later posted on X that her intention was to highlight the need to build an economy that¡¯s resilient to currency fluctuations, in an apparent bid to cool speculation that she was downplaying the impact of the recent weak yen.
On Tuesday, Katayama also emphasized that Japan continues to coordinate closely with the U.S., alluding to the possibility of joint action in the markets.
¡°Japan and the U.S. are always coordinating, at my level and also at the chief currency official¡¯s level,¡± said Katayama. ¡°We agreed on a joint statement in September, so we¡¯ll continue to coordinate in line with that agreement and take appropriate responses.¡±
The Japanese currency had reached the fringes of the ?160 per dollar level last month, around where authorities last stepped into the market. The slide in the Japanese currency was seen as being driven by the Bank of Japan¡¯s stand-pat decision and Gov. Kazuo Ueda¡¯s post-decision press conference, which markets largely interpreted as dovish.
Traders are now bracing for increased volatility as Sunday¡¯s Lower House election approaches, betting that Takaichi¡¯s Liberal Democratic Party is likely to secure a sweeping victory. Such an outcome would likely pave the way for more aggressive fiscal policy, potentially fueling inflation and putting pressure on the yen and Japanese government bonds.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.