A recent speculative movement in the foreign exchange sounded an alarm in the Japanese government on Friday, said Japan’s top finance officials. This causes the authority to plan an intervention if it deems the fluctuation in the foreign exchange market is too excessive, as the yen retreats further.
The U.S. dollar rose to 157.93 against the Japanese yen, the highest since July, after the Bank of Japan decided to maintain its interest rate on Thursday, with the governor giving a hint at a potential hike of borrowing costs stemming from the currency situation.
Japanese policymakers rarely describe currency market situations as alarming. The recent development is now highlighting the government’s growing concern over the falling yen.
Japan’s central bank decision to maintain its interest rate came just hours after the U.S. Federal Reserve rate cuts meeting. The Fed, after slashing its own interest rate, has signaled for a caution in the rate policy in 2025. The different paths of both countries may suggest that the gap between the two countries’ interest rates may remain longer than expected.
Japan’s last intervention in the currency market was in July when they moved to support the yen which was nosedived to a 38-year low to below JPY 161 per dollar.
