In a world of rising interest rates, policy markers in Japan sought to balance a commitment to ultra-loose policy without letting yen tumble further towards 20-year low.
Amidst a open market operation by Bank of Japan, the country’s finance minster fired warning shots to traders looking to put pressured on the country’s currency. The movement by BOJ and finance ministry capped benchmark bond yield and steadied the yen’s slide.
The intervention met its objective as the authorities stepped up efforts to warn of the negative economic consequences of a weaker yen. Japan’s chief currency official Masato Kanda said he and his U.S. counterpart discussed exchange rates Tuesday, a day after the yen breached the 125 mark against the dollar for the first time in seven years.
“We discussed various global issues including debt problems, and the Russian sanctions and support for Ukraine,” said Kanda.
Japan remains committed to keep policy loose to boost economic growth despite surging inflation, which is policy divergence compared to rest of the world.
The yen dipped to a seven-year low after BOJ conducted two unlimited purchase operations on Monday and announced its plans throughout Thursday.
