Japan repeats verbal warning against yen bears, BOJ keeps dovish tone By Reuters

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Written by Leika Kihara and Rocky Swift

TOKYO (Reuters) – Japan continued to stoop on Thursday to moderate the yen’s slide as a top government spokesman reiterated that Tokyo would not rule out any measures to combat excessive currency migration.

Chief Cabinet Secretary Yoshimasa Hayashi did not say whether the decision included buying the yen, only that the government “sees the currency moving quickly.”

“If there is a big move, we want to respond appropriately and we can’t choose,” Hayashi told the regular meeting.

His words echo those of Japanese Prime Minister Masato Kanda, who said on Wednesday that the government would not stop taking action to tackle currency volatility.

The yen fell to a 34-year low against the dollar on Wednesday on expectations that the Bank of Japan (BOJ) will move slowly to raise interest rates, thereby maintaining a wide gap between Japanese and US interest rates.

The dollar briefly hit 151.975 yen on Wednesday, above the 151.94 level that Japanese officials intervened in October 2022 to buy the currency. It lost a chance to stand at 151.370 yen on Thursday.

The yen’s sharp decline comes despite the BOJ’s decision last week to end eight years of negative interest rates, as traders focused on its message that further hikes would be temporary.

After ending negative rates, many BOJ policymakers saw the need to move more slowly in ending loose monetary policy, a summary of views at last week’s meeting showed on Thursday.

“With it weakening to a 34-year low against the dollar, the Ministry of Finance signaled that intervention in foreign markets is imminent,” said Marcel Thieliant, head of Asia-Pacific at Capital Economics.

“However, the yen will not get much support from Japan’s monetary policy makers as inflation is expected to be lower than and above the Bank of Japan’s forecast.”

Data released on Friday may show annual inflation in the Japanese capital, seen as a leading global indicator, fell to 2.4% in March after a gain of 2.5% in February, according to a Reuters poll.

Japanese policymakers have historically favored a weak yen because it helps boost profits for the country’s biggest manufacturers.

But the yen’s sharp depreciation has added to Tokyo’s recent headwinds in raising export prices, hurting consumption and trade profits.

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