TOKYO (Reuters) - Japanese policymakers stepped up warnings against a rising yen on Friday, saying recent moves were one-sided and they would respond appropriately, as worries grow that the buoyant currency could damage the export-reliant economy.
Finance Minister Taro Aso told reporters after a cabinet meeting that he would deal with currency market moves “with a sense of urgency”, after the dollar hit a 15-month low against the Japanese currency.
Aso’s comments were an apparent attempt to play down remarks he made in parliament on Thursday when he said he did not see the yen’s current moves as strong or weak enough to warrant intervention.
His comments on Friday were echoed by top currency diplomat Masatsugu Asakawa and Chief Cabinet Secretary Yoshihide Suga, who both warned that recent yen gains have been “one-sided”.
The recent global stock sell-off has increased investor appetite for the yen, which is seen as a haven in times of market turmoil.
The dollar fell to as low as 105.5 yen, its lowest in 15 months.
“The currency market moves over the past several days have been one-sided despite very favourable economic fundamentals,” Asakawa told reporters after a regular meeting of officials from the finance ministry, the Bank of Japan and financial regulators.
Asakawa added that he was watching currency markets more carefully than ever.
“I’m closely in touch with currency authorities in other countries,” he said.
The reappointment of Haruhiko Kuroda as BOJ governor and the nomination of BOJ executive director Masayoshi Amamiya and Waseda University professor Masazumi Wakatabe as deputy governors had little impact on the yen, although the proposed leadership trio were seen certain to keep the central bank on an ultra-loose policy path.
Some analysts said worries over the United States’ twin trade and budget deficits amid a government spending splurge and large corporate tax cuts were a factor behind dollar weakness.
“I’m not guiding currency policy with specific levels in mind... stability in the currency market is very important,” Aso told reporters after a cabinet meeting.
He reiterated that there was agreement among the Group of Seven and G20 nations that rapid currency swings and disorderly moves would hurt economies and financial markets.
“There was no change to our stance of ‘responding as appropriate when necessary’. I’ll continue to deal with currency market moves with a sense of urgency,” he added.
A strong yen erodes profits at Japanese manufacturers and could hurt the otherwise buoyant economy, which posted an eighth straight quarter of growth in October-December.
Reporting by Tetsushi Kajimoto; Editing by Chang-Ran Kim and Eric Meijer