Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Japan ex-currency tsar Yamasaki sees little scope for more yen falls

Published 11/24/2023, 05:09 AM
Updated 11/24/2023, 05:11 AM
© Reuters. A Japan Yen note is seen in this illustration photo taken June 1, 2017. REUTERS/Thomas White/Illustration
USD/JPY
-

By Tetsushi Kajimoto and Takaya Yamaguchi

TOKYO (Reuters) - Former top Japanese currency official Tatsuo Yamasaki said he expects the yen will not weaken significantly from the current 150 to the dollar and is likely to regain strength next year.

Yamasaki, Japan's top financial diplomat from 2014 to 2015 as vice minister of finance for international affairs, told Reuters in an interview that the Bank of Japan could ditch its negative interest rate policy in April at the earliest, when policymakers consider the results of annual labour talks held in the spring, as well as other indicators.

Last year, yen weakness triggered a spike in import prices, which in turn fed into inflation. But this year, the impact from the weak yen had eased somewhat, while the interest rate gap with the U.S., which fuelled the yen's fall, had begun to narrow, Yamasaki said.

"Compared with last year, the implied volatility has become a lot smaller," he said.

"That will deprive authorities of the reason for intervention."

Authorities had cited currency market volatility as the key factor in determining whether they might need to intervene.

Officials last intervened to sell dollars and buy yen in October last year when the dollar spiked to near 152 yen. The U.S. currency regained strength close to the same level this year but Japan has stopped short of action in the foreign exchange market.

Yamasaki played an operational role in heavy currency market intervention more than a decade earlier to stem a steep strengthening of the yen.

Yamasaki said intervention by the authorities could not be ruled out.

"From the economic fundamentals point of view, 150 yen is way too weak from reasonable yen levels," Yamasaki said.

© Reuters. A Japan Yen note is seen in this illustration photo taken June 1, 2017. REUTERS/Thomas White/Illustration

Japan's top currency official, Masato Kanda, said he was on "standby" just before authorities intervened in the market last year. This year, Kanda also used the term "standby" when the yen weakened near 152 yen.

"First I thought he was joking. But he would have gone on to foray into the currency market if the yen weakened further at that time. That's what I felt after talking with various people," Yamasaki said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.