Japanese Finance Minister Shunichi Suzuki stated in Tokyo that the government is "ready to take appropriate action at any time as needed" in response to currency movements. He emphasized, "Our stance has not changed. We will respond appropriately as needed at any time."
This comment comes as market expectations for potential Japanese intervention in the foreign exchange market are rising, particularly with lower liquidity anticipated during the upcoming US holiday weekend. Minister Suzuki also noted that Japan maintains close communication with the United States on currency policy, a statement often interpreted by markets as a signal that intervention could be imminent.
However, he did not use stronger terms such as "decisive action," which are typically employed to warn against speculative behavior. This omission is seen by some as a deliberate effort to maintain policy ambiguity and avoid sending overly clear signals to the market.
Earlier this week, interviews by financial news outlets with senior Japanese officials responsible for currency affairs, along with related reports, suggested authorities might act with little to no prior warning, a departure from the communication style observed before the intervention on April 30.
The yen found some support following the release of weaker-than-expected US June employment data, which tempered market expectations for further Federal Reserve interest rate hikes. Widening interest rate differentials between the US and Japan have been a key factor weighing on the yen.
As of July 3 during Tokyo trading, the yen was trading around 161.17 per US dollar. Earlier in the week, it had weakened to 162.84, its lowest level since 1986. Minister Suzuki declined to comment on specific exchange rate levels.
The yen's depreciation is impacting businesses. A report released this week by Tokyo Shoko Research indicated that the number of corporate bankruptcies in the first half of this year attributed to the weak yen was the highest for the period since 2022. In response, Minister Suzuki stated the government would continue to ensure the proper functioning of economic and fiscal policies, adding, "We will fully advance economic measures to support private-sector economic activity."
Separately, Economy, Trade and Industry Minister Ryosei Akazawa noted at a different press conference the need to closely monitor the impact of currency fluctuations on small and medium-sized enterprises. He said, "Small and medium-sized enterprises are facing an increasingly severe business environment due to rising prices driven by the situation in the Middle East." He added that the government is taking steps to enhance financing and credit support and will continuously assess the impact of exchange rate movements, responding as necessary.
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