Japan’s top currency official says govt ready to act to curb yen volatility
TOKYO: A Japanese official said on Tuesday that volatility was rising in the currency market and the government stands ready to take necessary steps if the market becomes too erratic.
"Volatility is rising. Each country shares the G7/G20 view that excess volatility and disorderly moves are undesirable for the economy," Masatsugu Asakawa, vice finance minister for international affairs, told reporters.
"We will keep close watch on market moves with a sense of urgency, while thoroughly checking to see if there's any speculative move," he said.
Speaking after a meeting with his counterparts from the Bank of Japan and Financial Services Agency to discuss market developments, Asakawa said the government would take action as appropriate if volatility increases.
He did not elaborate what action would be called for.
Asakawa's comments underscored Japan's concerns about the return of a strong yen. Authorities tend to be sensitive about signs of the yen gaining strength as a strong currency would undermine the country's export-led economic recovery.
The dollar fell to a four-month low of 110 against the safe-haven yen on Tuesday as Nikkei index dropped more than 5 per cent to a 20-month low after a slide on Wall Street deepened amid US political turmoil.
Asakawa said financial markets seem to have "overreacted" to some weak economic indicators and US political moves over fiscal and monetary policies.
Economic fundamentals in Japan and the United States remained firm and they were in a gradual recovery trend, he added.
The government must ensure swift passage of budget bills in parliament next year to support the economy, while the central bank will continue with strong monetary easing to achieve its 2 per cent inflation target, he said.