An electronic quotation board displays the foreign exchange rates, including the yen's rate against the US dollar left and the euro center, at a foreign exchange brokerage in Tokyo on April 19, 2022. Japan's top government spokesperson said on Monday that Japan's top government spokeswoman said on Monday that Tokyo is prepared to respond if needed and that KAZUHIRO NOGI AFP TOKYO is concerned about sharp falls in the yen currency.
The remark echoed Friday's statement by the government and central bank, but did not a lot to prevent a plunge in the yen to 135.22 against the dollar, the currency's lowest level since October 1998.
It is important that currency rates move in a stable way, reflecting fundamentals. There have recently been sharp yen declines, which we are concerned about, Chief Cabinet Secretary Hirokazu Matsuno told a regular news conference.
We are ready to respond as needed, while communicating with each country's currency authorities. Matsuno didn't want to say anything about Tokyo's intervention in order to curb the sharp decline in the yen.
The Bank of Japan BOJ has always pledged to keep rates low, making Japanese assets less attractive for investors, unlike other major central banks that are flagging aggressive interest rate hikes to tackle inflation.
The yen has fallen more than 15 percent against the dollar since early March due to increasing policy divergence.
A man wearing a face mask walks past the Bank of Japan headquarters in Tokyo on May 22, 2020. KAZUHIRO NOGI AFP Central bank chief Haruhiko Kuroda warned of the disadvantages of yen declines, and shifted away from his long-held belief that the currency's weakness was generally good for the export-reliant economy.
The yen's recent sharp declines are negative for Japan's economy and therefore undesirable, as they make it hard for companies to set business plans, Kuroda, the bank's governor, told parliament on Monday.
The BOJ will be in touch with the government to examine the impact of currency moves on the economy and prices. Kuroda pledged to keep his monetary policy ultra-loose to support an economy that is yet to recover fully from the coronaviruses epidemic.
The yen rallied briefly on Friday after a rare joint statement, seen as the strongest warning to date that Tokyo could intervene to support the currency.
READ MORE: Sharp fall in yen weighs on Japan's economy
The dollar lost momentum after Friday's US inflation data reinforced market expectations for the Federal Reserve to raise interest rates in the fight against inflation.
The domestic economy is impacted by the move, as yen-based import prices are surging at a record annual pace, which has put pressure on household balance sheets.
The yen has weakened towards recent 7 year lows versus the Chinese yuan and is hitting new multi-year lows against the Korean won and the Taiwanese dollar, which should provide some relief for Japan's widening trade deficit.
The decline of the yen increases the attractiveness of its stock market among foreign investors who consider it undervalued compared to European and US markets. Japanese stocks have outperformed rivals in the year 2022, although they are still down as investors dump riskier assets.