Japanese Finance Minister Shunichi Suzuki has expressed concern over the weakening yen, stating that authorities will take necessary action to prevent economic damage. Suzuki emphasized that rapid and one-sided movements in the currency are undesirable, especially considering the potential impact on the economy. He stressed the government’s sense of urgency in monitoring the situation and analyzing the underlying factors behind the yen’s decline.
The yen recently hit a 38-year low against the US dollar, reaching 160.88 late on Wednesday, the lowest level since 1986. This downward trend has been influenced by the US Federal Reserve’s signals of prolonged high interest rates, as well as uncertainties surrounding the upcoming French parliamentary elections. In response to the yen’s weakening, Japan is considering intervention to support the currency, as it did in April when the yen hit a 34-year low.
The Bank of Japan has kept borrowing costs near record lows in an effort to stimulate economic growth and boost inflation. However, the yawning gap between US and Japanese interest rates has led to a significant devaluation of the yen since early 2021. This has benefited Japanese exporters but has also increased the cost of imports, particularly food and fuel, impacting household budgets.
As traders awaited signs of intervention in the market, Japanese stocks fell on Thursday, with the benchmark Nikkei 225 index closing down 0.8 percent. The government’s commitment to closely monitoring the yen’s movement and taking necessary actions underscores its determination to safeguard the country’s economy from the impact of a depreciating currency.