Masato Kanda, Japan’s top foreign exchange diplomat, said Monday that authorities would take appropriate action if there were excessive movements in the foreign exchange market, and adding Japan to the U.S. Treasury’s foreign exchange watch list would not limit their action.
Speaking to reporters, Kanda said foreign exchange market interventions would not be linked to specific exchange rates, but that Japan had policy space to ensure exchange rates moved in a stable manner and reflect the fundamentals.
“We will react strongly to movements that are too rapid or motivated by speculators,” he said. “If no action is taken against such movements, people, businesses and households will suffer.
The yen came under pressure after the Bank of Japan decided this month not to reduce its bond-buying program until its July meeting. The dollar traded at 159.84 yen on Monday.
The Bank of Japan, at the request of the Japanese Finance Ministry, spent some 9.8 trillion yen ($61.64 billion) to lift the currency from a 34-year low of 160.245 per dollar, reached on the 29 april.
Mr Kanda also said the US Treasury’s foreign exchange control list had “absolutely no impact” on Japan’s policy options.
A U.S. Treasury report released Thursday added Japan to its foreign exchange watch list, alongside six countries that were on the previous list.
