BOJ Is Concerned About Yen’s Recent Free Fall Moves

After the meeting between the Ministry of Finance, the Financial Services Agency, and the Bank of Japan, Japan’s top currency diplomat Kanda made the following remarks:

• They said that they had agreed at the meeting on the need to watch markets with a strong sense of urgency. He added that they were recently seeing speculative, one-sided rapid yen moves.
• Recently, we have seen speculative, one-sided, rapid yen moves.
• We won’t rule out any steps, and we’re ready to take action in the FX market.
• The Yen’s recent movements can best be described as excessive volatility. This is having a significant impact on the Japanese economy, and it is something that needs to be addressed urgently.
• The recent decline in the yen’s value cannot be justified based on economic fundamentals. This suggests that other factors are at play, such as speculation or political pressure. Whatever the case may be, the yen’s weakened state is cause for concern.

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Some of the remarks about the yen’s decline have been harsher than expected, causing a brief dip in the USD/JPY currency pair from 143.75 to 143.45. However, despite the warnings, I don’t think they are ready to draw a hard line on the decline just yet. If there is a quick spike in USD/JPY towards 150.00, we might see them take more decisive action.