Japan’s Suzuki expresses strong concern over negative effects of weakened Yen
28.05.2024, 01:26

Japan’s Suzuki expresses strong concern over negative effects of weakened Yen

Japanese Finance Minister Shunichi Suzuki said on Tuesday that he has a strong concern over the negative effects of weakened Yen and he will take all necessary measures on foreign exchange (FX) as required. 

Key quotes

emphasizes stability in FX movements to reflect fundamentals

opposes undesirable excessive currency fluctuations

to take all necessary measures on foreign exchange as required

expresses strong concern over negative effects of weakened yen

prioritizes wage growth above inflation 

refrains from commenting on government intervention in markets

Important for currencies to move in stable manner reflecting fundamentals

is closely watching FX moves

weak yen boosts exporters' profits but it increases the burden on consumers

is more concerned about the negative impact of a weak yen

Market reaction 

These comments have little to no market reaction to the Japanese Yen (JPY). At the time of writing, USD/JPY is trading 0.04% lower on the day to trade at 156.84. 

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.

The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

 

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