The yen continued to weaken against the U.S. dollar on Monday (Local time), approaching the critical 160 level, which is seen as a key point for potential intervention by Japanese authorities. Amid persistent devaluation pressures, Japan's top foreign exchange official, Masato Kanda, issued a stern warning, stating that the government is prepared to intervene in the currency market around the clock if necessary.
Kanda emphasized that excessive exchange rate fluctuations could negatively impact the national economy. He noted that the government is ready to take appropriate action if speculative behavior becomes excessive.
As of the latest report, the yen had slipped approximately 0.1% to 159.90 per dollar, close to the 160.17 level at which Japan last intervened in the forex market. Data indicated that Japan spent 9.8 trillion yen ($61.3 billion) on currency interventions between April 26 and May 29, with significant actions on April 29 and May 1. Foreign exchange reserve data suggested that Japan may have sold U.S. Treasury securities to fund these interventions.
Kanda also mentioned that major global economic entities maintain daily communication on a wide range of topics, including exchange rates. He pointed out that the U.S. does not object to Japan's currency interventions, with transparency being the primary concern for American authorities. Kanda stressed that the U.S. decision to place Japan on its currency monitoring list does not influence Japan's exchange rate policies.
Despite Japan's firm stance, market sentiment regarding the yen's outlook remains cautious. Analysts noted that the yen's devaluation pressure is unlikely to ease fundamentally in the short term given the ongoing interest rate differential between Japan and the U.S. Investors will closely watch Japan's subsequent actions and the Federal Reserve's recent policy trajectory, which will jointly influence the yen's exchange rate.