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April 21, 2022 • 23 minutes ago • 2 minutes read • Join the conversation
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TOKYO — Japan explained the yen’s recent “rather rapid” decline to its G7 peers, Finance Minister Shunichi Suzuki said on Thursday, underscoring Tokyo’s growing concerns over the currency’s sharp fall to a two-decade low against the dollar.
Suzuki did not comment on the reaction of G7 financial leaders, only saying that the meeting in Washington, DC focused on discussions about the global economy and Russia’s invasion of Ukraine rather than exchange rate movements.
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In a statement released after their meeting, leaders said they were closely monitoring global financial markets, which have been “volatile,” but made no direct mention of exchange rates.
Suzuki said the G7 should likely stick to its agreement that markets should drive exchange rates, that the group will closely coordinate currency movements and that excessive and disorderly exchange rate movements would hurt growth.
“I believe the basic thinking of the G7 on exchange rates remains intact,” Suzuki told reporters after meeting with financial leaders from the Group of Seven advanced economies, held on the sidelines of International Monetary Fund (IMF) meetings.
Markets are focused on Suzuki’s meeting with US Treasury Secretary Janet Yellen, which is expected later this week.
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The yen extended losses from earlier in the day, falling to 128.63 yen/dollar shortly after the comments but was still below a 20-year low of 129.40 hit on Wednesday.
The currency has tumbled against the dollar, with the Bank of Japan (BOJ) continuing to defend its ultra-low interest rate policy amid increasing likelihood of aggressive rate hikes by the US Federal Reserve.
Investors believe the yen has yet to fall, with most betting that even government intervention would not be enough to reverse the momentum.
Highlighting the difficulties Tokyo might face in seeking global agreement to intervene, a senior IMF official told Reuters that the yen’s recent falls have been driven by fundamentals with no signs of disorderly exchange rate movements.
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“The Treasury will have a hard time stepping in and likely to further disrupt markets,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.
“The BOJ is not responsible for monetary policy, so will focus on meeting its price target by maintaining loose monetary policy.”
BoJ Governor Haruhiko Kuroda, who also attended the G7 meeting, said excessive exchange rate volatility could hurt operations.
“The BOJ will carefully monitor how currency movements might affect Japan’s economy and prices,” he said. (Reporting by Leika Kihara; Additional reporting by Tetsushi Kajimoto, Daniel Leussink, and Kantaro Komiya; Editing by Chang-Ran Kim, Simon Cameron-Moore, and Kim Coghill)
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