TOKYO-Japanese Finance Minister Shunichi Suzuki said on Tuesday that there was no policy contradiction between the finance ministry's yen buying to support the currency and the Bank of Japan printing money to sustain its ultra-loose monetary policy.
Monetary easing aimed at sustainable and stable price hikes, such as wage growth and currency intervention in response to excessive market moves, are different in terms of policy objectives, and therefore are not contradictory, Suzuki said.
He said that the central bank's policy is aimed at achieving price stability, not targeting currencies.
Suzuki made remarks at the news conference when asked whether the BOJ's monetary easing may cause excessive yen weakening and whether the policy mix between the government and the central bank was having the intended effects.
The BOJ is set to maintain ultra-low interest rates at its two-day policy meeting ending on Friday to support the fragile economy, even at the cost of an unwelcome fall in the yen to fresh 32 year lows.
Policymakers have expressed concerns about the impact of a weak yen on living costs. The BOJ is an outlier for pursuing ultra low rates, while central banks have raised rates to combat rising inflation.
Japan has been conducting yen-buying interventions in the foreign exchange market to defend the yen against sharp declines in the foreign exchange market, which has been driven by the widening divergence between Japanese and U.S. interest rates.
Suzuki said that Japanese authorities are in constant touch with U.S. counterparts and ready to take appropriate action in the currency market against volatile yen moves.
The minister stated that the government would not tolerate excessively volatile yen moves driven by speculative trading.
If we leave unattended sharply volatile currency moves, driven by speculative trading, that would affect companies and households, Suzuki said.
He said that Japan's yen-buying intervention is intended to smooth market volatility, signaling that Tokyo is not targeting a specific currency level in order to decide when to buy yen.
Japanese authorities are in constant touch with U.S. counterparts and ready to take appropriate action in the currency market against volatile yen moves, Suzuki said.