by Leika Kihara and Rocky Swift

TOKYO (Reuters) – Japan again threatened to intervene in the foreign exchange market over the fall in the yen, with the government spokesman ruling out no option to stop what Tokyo sees as excessive movements in his currency.

It is unclear at the moment whether purchases of the yen are among the options considered by Yoshimasa Hayashi, secretary general of Japanese Prime Minister Fumio Kishida’s office, who simply declared that the authorities were “monitoring movements on currencies with a feeling “high urgency”.

“If there are excessive movements, we would like to react appropriately and we do not exclude any option,” he insisted at a press conference.

His comments echo those of Masato Kanda, Japan’s top diplomat responsible for currency issues, who said on Wednesday that authorities were not ruling out any measures to counter disorderly currency movements.

The yen fell to its lowest level in 34 years against the dollar on Wednesday, with traders anticipating a slow rise in key rates from the Bank of Japan (BoJ), which would not significantly reduce the gap between interest rates. Japanese and American interest.

The dollar briefly reached 151.975 yen on Wednesday, surpassing the level of 151.94 which at the time triggered an intervention by Japanese authorities in October 2022 via currency buybacks. The yen has since returned to 151.370 yen on Thursday.

The new bout of yen weakness comes despite the BoJ’s decision last week to end eight years of negative interest rates, with traders focusing more on the bank’s dovish message that suggests a further rise in rate will not occur for some time.

By putting an end to negative rates, many BoJ officials considered it necessary to move slowly in gradually abandoning an ultra-accommodating monetary policy, shows the report of their debates published Thursday.

“With the weakening of the yen, which reached its lowest level in 34 years against the dollar, the Ministry of Finance indicated that intervention in the foreign exchange market was imminent,” notes Marcel Thieliant, head of the region. Asia-Pacific at Capital Economics.

“But the yen is unlikely to receive much support from Japanese monetary policymakers, as it is more likely that inflation will be lower than higher than the Bank of Japan forecasts,” he added. .

Price data, due Friday, is expected to show that core inflation in Tokyo, seen as a leading indicator of national-level trends, slowed to 2.4 percent in March on an annual basis after rising 2.5 % in February, according to the Reuters consensus.

Japanese policymakers generally favor a weak yen because it helps boost profits for the country’s big exporters.

However, the sharp fall in the yen has recently increased the cost of importing raw materials, which is harming consumption and distributors’ profits.

(Report by Leika Kihara and Rocky Swift; by Claude Chendjou, edited by Blandine Hénault)

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