Anna 
Japan’s Vice Finance Minister for International Affairs, Masato Kanda, issued a warning against excessive exchange-rate moves and indicated the readiness to take appropriate action. The statement follows the recent decline of the yen to levels that market participants interpret as increasing the likelihood of currency intervention.
Kanda, attending the G20 finance leaders’ meeting in Sao Paulo, emphasized the importance of stable exchange rates reflecting fundamentals. He expressed a strong sense of urgency, stating, “We’re watching currency moves with a strong sense of urgency, and ready to respond appropriately if we see excessively volatile moves.”
The yen has been the worst-performing major currency this year, depreciating by 6% against the dollar. The decline has raised concerns in Japan about the potential negative impact on households and retailers due to increased costs of importing raw materials.
Kanda stressed the need for policymakers to be mindful of the risk of heightened volatility in financial markets, including exchange rates. He highlighted the undesirability of excess volatility in the currency market and emphasized the importance of maintaining the G20 commitment on exchange rates.
While Japanese authorities have not intervened in the currency market since 2022, traders are on alert for any signs of intervention as the yen approaches critical levels. The authorities have previously indicated that they are more concerned about the speed of currency moves than specific levels when deciding on intervention.
The recent declines in the yen have been influenced by market expectations that the Bank of Japan will maintain ultra-low interest rates, even after lifting short-term borrowing costs out of negative territory.
