Japanese Authorities May Intervene in Currency Market
Japanese authorities are considering intervening in the currency market to stabilize the yen, which has been experiencing excessive volatility and declining against the dollar.
Satsuki Katayama, acting chairperson of the Liberal Democratic Party's policy research council, believes that intervention is justified given the current circumstances. She argues that the yen's recent decline is out of line with economic fundamentals and could harm the Japanese economy.
Katayama suggests that authorities could have intervened during the recent G7 finance leaders meeting in Washington, but ultimately decided to wait for a more opportune moment. She believes that authorities are carefully considering the timing of intervention to maximize its impact.
While the Bank of Japan has already raised interest rates once this year, Katayama cautions against further increases due to the uncertain global economic outlook. She believes that intervention in the currency market would be a more appropriate response to the current situation.
The dollar has been strengthening against the yen due to market expectations of a near-term U.S. interest rate cut. This has pushed the yen to a 34-year low, raising concerns about the need for intervention.
Currently, the dollar is trading at 154.85 yen, approaching the 155 level that many traders believe could trigger intervention by Japanese authorities.