Japanese Finance Minister Shunichi Suzuki has expressed concerns over the recent decline of the yen against the US dollar. He emphasized that necessary actions would be taken to address the situation and mitigate any potential economic damage. The currency has reached a 38-year low, prompting discussions around the possibility of intervention to support the yen.
The weakening of the yen can be attributed to various factors, including signals from the US Federal Reserve regarding interest rate policies and political uncertainties in Europe. Japan had previously intervened to bolster its currency in April, purchasing a record amount of yen. This recent decline marks the third time authorities have stepped into the foreign exchange market in 2022.
Despite the positive effects on Japanese exporters, the yen’s depreciation has led to increased import costs, particularly for essential goods like food and fuel. This has put pressure on household budgets and contributed to the overall economic concerns in the country. As a result, Japanese stocks experienced a decline as traders awaited potential interventions in the market.
Japanese policymakers are closely monitoring the situation with a “sense of urgency,” as they continue to manage challenges created by an ongoing trend of investors shifting away from high-interest rate currencies like Japan’s due to disparities between interest rates between Japan and other countries such as United States. While Suzuki emphasized avoiding rapid and one-sided movements in currency markets, he also acknowledged that necessary actions would be taken if needed.
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