Japan's monetary authorities, including the Bank of Japan, Finance Ministry, and Financial Services Agency, convened an emergency meeting to address the weakening yen. They expressed concern over "disorderly and speculative moves" in the currency market and hinted at potential intervention to stabilize the situation.
The yen has experienced a significant decline against the dollar, reaching a 34-year low. Despite the Bank of Japan's recent shift away from negative interest rates, the currency has continued to lose ground. This depreciation has raised concerns about rising import costs and inflation.
Finance Minister Shunichi Suzuki indicated that authorities were prepared to take "decisive steps" to counter the yen's weakness. He emphasized the need to monitor market movements closely and not rule out any options.
The Bank of Japan Governor, Kazuo Ueda, acknowledged the impact of currency fluctuations on the economy and prices. He stated that the central bank would closely monitor these developments and respond through monetary policy if necessary.
Analysts believe that the risk of intervention is high, as the yen's decline has reached a new cycle high. They suggest that inaction from Japanese authorities could encourage further depreciation of the currency.
The weakening yen has also had ripple effects on other currencies, including the Chinese yuan. Strategists warn that the decline in the yen could trigger a domino effect, causing downside risks for other currencies.