Satsuki Katayama, a notable figure in the Liberal Democratic Party, has brought attention to the considerable depreciation of the Japanese yen in relation to the U.S. dollar, suggesting that the current yen declines are not aligned with the fundamental economic principles. As the acting chairperson of the LDP's policy research council, Katayama highlighted the concern over excessive volatility in the dollar/yen exchange rate, citing a rise from around 140 to almost 155 since the start of the year.
In a recent interview, Katayama underscored the potential for Japanese authorities to take action in the currency market to prevent further decline of the yen, referring to a possible intervention that could help stabilize the currency. Drawing on her experience at the Ministry of Finance, Katayama indicated that the timing of a currency intervention, although not carried out during the G7 finance leaders' meeting in Washington last week, is under careful consideration by Japanese authorities to ensure maximum impact if such a step is taken. The Bank of Japan's decision-making regarding interest rates was also discussed, with Katayama advocating for caution and deliberation due to the uncertainty surrounding the global economic landscape. Katayama stressed the need for the central bank not to hastily raise interest rates again, especially amid a broader rally of the U.S. dollar fueled by diminished expectations of an imminent rate cut by the Federal Reserve. The heightened probability of currency intervention by Japanese authorities was attributed to the downward pressure on the yen, with the dollar nearing 155 yen, a critical threshold that traders see as potentially triggering market action from Tokyo.