Japan’s top foreign exchange diplomat, Masato Kanda, has reiterated the government’s vigilance over recent yen fluctuations, stating that they are monitoring the foreign exchange market with a “high sense of urgency”. The comments come amid ongoing concerns about the yen’s weakness, which has seen the currency approach critical levels against the U.S. dollar.
Kanda's remarks signal that Japan could intervene in the forex market if volatility persists, a move the country has made in the past when the yen's depreciation threatens economic stability. The yen has been under significant pressure, trading near 150 per dollar, as the Bank of Japan maintains its ultra-loose monetary policy while other major central banks, particularly the U.S. Federal Reserve, continue to raise interest rates.
“We are closely watching FX moves with a high sense of urgency,” Kanda said during a press conference on Friday, fueling speculation that the government may step in to curb further yen weakness. Any intervention, however, would depend on the speed and volatility of the moves, rather than a specific level, according to analysts.
Despite the yen's ongoing slide, market participants are cautious about expecting immediate action. The Bank of Japan remains dovish, with no signs of shifting its policy direction in the near term. As a result, the yen is likely to face continued downward pressure unless a coordinated effort is made to stabilize the currency.
Japan's previous interventions have had mixed results, providing only temporary relief. Traders are now focused on the BOJ’s upcoming meeting, where any change in tone could influence the yen’s trajectory. Until then, market volatility is expected to persist, as officials keep a watchful eye on the situation.
