The Yen is witnessing unilateral and sudden fluctuations, causing concern and close monitoring by the Japanese government, said Chief of the cabinet Office Minoru Kihara.
Speaking at a press conference on Thursday, Mr. Kihara emphasized that excessive and chaotic fluctuations in the foreign exchange market need to be closely monitored.
We are concerned about recent unilateral and sudden developments in the currency market, he said. "The important thing is that the exchange rate must be stable, accurately reflecting the basic factors".
His comments came after the Yen fell to more than 157 JPY to $1, its weakest level since January, amid expectations of a Fed rate cut.
The Yen continued to depreciate after a meeting between Japan's top financial and monetary officials yesterday, when they discussed the financial market in general but did not directly mention the Yen's developments. Finance Minister Satsuki Katayama said she and Governor of the Bank of Japan Kazuo Ueda and Minister of Growth Strategy Minoru Kiuchi agreed to closely monitor the market, but the Yen was not a specific topic of discussion.
The view that the exchange rate needs to reflect basic factors was also repeated on Thursday by the Head of the Policy Department of the ruling Liberal Democratic Party, Takayuki Kobayashi.
Concerns about the possibility of increased public debt as Prime Minister Sanae Takaichi is preparing to announce a new stimulus package are also putting pressure on the Yen and fueling a wave of selling off government bonds. The yield on the 5-year and 10-year bonds rose to their highest level since 2008 in the Thursday session.
Mr. Kihara tried to reassure investors, saying that the Takaichi cabinet remains steadfast in the principle of "responsible and proactive fiscal policy" in the process of promoting growth.
Through this approach, we aim to achieve fiscal sustainability by reducing the public debt-to-GDP ratio and strengthening market confidence, he said.
