Japanese Authorities May Intervene in Currency Market, Says LDP Executive
Japanese authorities could intervene in the currency market to address the recent excessive decline of the yen, according to Satsuki Katayama, acting chairperson of the Liberal Democratic Party's (LDP) policy research council.
Katayama believes the current volatility in the dollar/yen exchange rate, which has risen from around 140 to near 155 since the beginning of the year, is excessive and out of line with economic fundamentals. She stated that Japan would not face criticism for intervening in the market to stabilize the yen.
While authorities did not intervene during the recent G7 finance leaders meeting in Washington, Katayama believes they are likely considering the best timing to maximize the impact of any intervention.
She also cautioned against the Bank of Japan raising interest rates again, citing uncertainty in the global economic outlook.
The recent broad dollar rally, driven by receding expectations of a near-term U.S. interest rate cut, has pushed the yen to a 34-year low. This has increased the likelihood of intervention by Japanese authorities, with the dollar currently approaching the 155 level that traders see as a potential trigger for action.