Japan vows vigilance over currency movements as yen approaches 11-month low


2nd October 2023 – (Hong Kong) Japan’s Chief Cabinet Secretary, Hirokazu Matsuno, announced on Monday that the government would maintain a vigilant stance in monitoring currency movements, emphasising the need for stability aligned with fundamental economic factors.

The Japanese yen has recently weakened, reaching levels near a 11-month low of around 150 yen to the U.S. dollar. This decline has sparked market speculation regarding potential intervention by the government to curb further depreciation, similar to actions taken in the previous year.

Finance Minister Shunichi Suzuki echoed this sentiment earlier in the day, expressing a cautious approach towards currency fluctuations, according to Bloomberg News.

The Japanese government’s commitment to closely observe currency movements underscores the significance of maintaining stability in the foreign exchange market. A sudden and drastic depreciation of the yen could have wide-ranging implications for Japan’s economy, including its export competitiveness and overall financial stability.

The yen’s decline against the U.S. dollar can be attributed to various factors, including disparities in monetary policies between Japan and the United States, as well as market expectations surrounding interest rate differentials. These dynamics influence investors’ sentiment and their decisions regarding currency positions.

A weaker yen can benefit Japanese exporters by making their products more competitive and contributing to export-led growth. However, excessive volatility or an abrupt depreciation can disrupt economic equilibrium, leading to concerns about the sustainability of Japan’s economic recovery and potential negative consequences for domestic consumers.