The Japanese Deputy Finance Minister, Masato Kanda, has issued a clear signal that the Japanese government is considering measures to counter the significant depreciation of the yen, as the currency recently reached a 10-month low against the U.S. dollar.
Mr. Kanda expressed his concern that the yen’s depreciation is largely a result of speculative activities in the foreign exchange market. He emphasized that if such speculative behavior persists, the Japanese government is prepared to take necessary actions to address the situation effectively.
These statements from Mr. Kanda come in the wake of the yen’s decline to 147.80 per dollar, a drop exacerbated by the U.S. dollar’s strength against the majority of global currencies. This trend emerged as a response to rising U.S. government bond yields.
Following Mr. Kanda’s comments, there was a modest recovery in the yen’s value. Speculation also arose regarding the possibility of the Japanese government’s intervention in the foreign exchange market, a move not seen since October of the previous year.
Eisuke Sakakibara, former Finance Minister of Japan, renowned as “Mr. Yen,” has projected a potential decline of over 10% in the yen’s value from its current levels. He attributes this forecast to the Bank of Japan’s continuation of its ultra-loose monetary policy and anticipates multiple interest rate hikes by the Federal Reserve (Fed) as part of efforts to combat inflation.
The evolving situation in the foreign exchange market and the yen’s performance are being closely monitored by market participants, as Japan’s potential intervention and central banks’ monetary policies continue to shape the currency’s trajectory.