Japanese Finance Minister Shunichi Suzuki recently stated that any decision on currency market intervention would be based on volatility, rather than specific yen levels. This comes as investors are anticipating a potential intervention if the yen breaches the 150-per-dollar threshold. Suzuki emphasized that authorities are closely monitoring the currency market and are prepared to respond, urging against speculative actions as the yen approaches a one-year low against the dollar. He underscored that it is the volatility of the markets that will dictate intervention decisions, not just the currency levels themselves.

While Suzuki’s comments did not have a major impact on the foreign exchange market, traders remain vigilant for potential actions by the Japanese authorities. Last year, the yen reached levels that prompted intervention, and market participants are keeping a close eye on whether history will repeat itself. At a press conference, Suzuki further highlighted the importance of stable currency movements that reflect economic fundamentals. He stressed that the authorities are fully prepared to respond with a high sense of urgency.

In addition to discussing currency intervention, Suzuki also addressed the issue of long-term interest rates. He stated that authorities closely monitor the impact of movements in long-term rates on households and businesses, as rising rates can increase borrowing costs. Suzuki affirmed that long-term rates are determined by the market and reflect various factors. Furthermore, he acknowledged that a weak yen can contribute to inflation by raising import costs, but also noted that cost-driven inflation is influenced by other factors such as geopolitical conflicts and oil production cuts.

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