Japan’s top currency diplomat Masato Kanda said on Wednesday that authorities were on standby to respond to recent “one-sided, sharp” moves in the yen, escalating his warning to speculators as the currency fell below a key level.
Markets have been on alert in recent months for possible yen-buying intervention by Japanese authorities, who have been under pressure to combat a sustained slide in the currency as it pushes up import prices and the cost of living for households.
On Tuesday, the yen came under renewed and broad-based selling pressure after a tweak to the Bank of Japan‘s yield-control policy was seen by markets as insufficient to close the wide interest rate gaps that have weighed on the currency for years.
“Speculative trading seems to be the biggest factor behind recent currency moves,” Kanda, the vice finance minister for international affairs, told reporters of the yen’s declines.
The situation surrounding yen moves has become “more tense” than before, he said, adding that authorities will “respond appropriately without ruling out any options.”
“We are on standby,” Kanda said when asked about the possibility of yen-buying intervention, though he declined to say what kind of action authorities might take and when.
Chief Cabinet Secretary Hirokazu Matsuno also told reporters on Wednesday that authorities were ready to take appropriate measures “without ruling out any options” against excessive yen moves.
The tone of the authorities’ warnings was stronger than last week, when Finance Minister Shunichi Suzuki said excessive currency volatility was undesirable and the authorities were watching moves with a “strong sense of urgency.”
The yen fell to a one-year low against the dollar and touched a 15-year low against the euro on Tuesday as the BOJ’s decision disappointed markets, which were expecting a bigger step toward ending years of massive stimulus.
The Japanese currency rebounded 0.27% to 151.26 per dollar on Wednesday following Kanda’s warnings, but remained close to a one-year low of 151.74 hit the previous day.
Tokyo intervened in September last year, its first foray into the market to support its currency since 1998, after the BOJ’s decision to maintain its ultra-loose monetary policy drove the yen as low as 145 per dollar. It intervened again in October after the yen fell to a 32-year low of 151.94.
