Japan signals readiness to act following yen’s sharp decline

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16th April 2024 – (Tokyo) On Tuesday, Japan’s Finance Minister, Shunichi Suzuki, expressed the government’s readiness to implement measures to stabilize the yen as it plunged to a 34-year low, passing 154 against the U.S. dollar. The statement was made during a press conference in Tokyo after the yen’s value deteriorated overnight in New York, marking its weakest position since the 1980s.

The U.S. dollar’s strength persisted in early trading in Tokyo, maintaining levels in the lower 154 yen range. This latest drop in the yen’s value extends a trend of depreciating Japanese currency, which has raised concerns among traders and policymakers alike.

Suzuki emphasised the government’s vigilance over the currency market’s fluctuations and reiterated the readiness to take decisive action if the situation continues to deteriorate. However, he refrained from explicitly confirming whether this would involve direct market intervention, a strategy Japan has employed in the past under similar circumstances.

The ambiguity in Suzuki’s remarks comes at a time when market participants are keenly observing the threshold at which the Japanese government might step in. Historical precedents suggest that Japan has previously intervened when the yen weakened significantly, most recently in October 2022, when the dollar approached 152 yen.

During his address, Suzuki highlighted the complexity of publicly discussing the specifics of potential interventions. “With respect to whether the recent moves are excessive or rapid, I don’t think it’s appropriate to state our view because this is linked to our position to take all necessary steps,” he stated. This approach suggests a strategic ambiguity intended to maintain market stability without committing to immediate action.