By Tetsushi Kajimoto
TOKYO (Reuters) -Japan will not rule out any options available to respond appropriately to excessive currency moves, its top currency diplomat Masato Kanda said on Monday, stepping up warnings against recent yen weakening that was “rapid and one-sided.”
The vice finance minister for international affairs also told reporters that currencies should move stably reflecting fundamentals after the Japanese yen weakened beyond 143 yen on Friday, a seven-month low versus the dollar, and fell to 15-year low beyond 155 yen to the euro.
The Japanese currency, often perceived as a safe-haven asset, is now coming under renewed selling pressure, threatening an import cost spike in a blow to consumers.
“We have all options available and we are not ruling out any options,” Kanda said when asked whether authorities stand ready to intervene in the market. “I won’t comment on what to do now.”
The monetary policy divergence between the Bank of Japan (BOJ) and the U.S. Federal Reserve was seen as driving up the dollar, as Japan continues easing while the U.S. central bank has tightened policy aggressively to fight inflation.
Japan last conducted a rare yen-buying intervention in October to stem weakening when the Japanese currency plunged to a 32-year low near 152 yen against the dollar.
When asked about the chances of currency intervention, Kanda told reporters he would not rule out any options.
“Regardless of the direction, it’s generally not good for the economy if exchange rates move excessively in a way that deviates from economic fundamentals,” he said.
“Underlying moves are rapid and one-sided. Therefore we are watching carefully with a strong sense of urgency, and will respond appropriately to excessive moves.”
He added that authorities were focusing on the pace of moves in the yen, rather than its levels.
Investors have been selling yen after the BOJ kept interest rates ultra-low on June 16 and vowed to maintain its massive stimulus, in contrast to other central banks tightening monetary policy to combat rising inflation.
(Writing by Leika Kihara and Tetsushi Kajimoto; Editing by Kim Coghill and Jamie Freed)
