Japanese officials worrying that the yen is sliding too fast are getting little traction.
The currency tumbled to ￥124.30 per US dollar yesterday, its lowest since 2002, even as Japanese Chief Cabinet Secretary Yoshihide Suga expressed concern about the sort of sudden exchange-rate moves the G20 has said it would prefer not to see.
His comments came a day after Japanese Minister of Finance Taro Aso also showed unease about the pace of the yen’s slide.
Bank of Japan (BOJ) Governor Haruhiko Kuroda told CNBC that major currencies are in line with economic fundamentals.
“As agreed by the G20, sudden moves in foreign-exchange markets are undesirable and for the latest moves, we’d like to continue to monitor carefully,” Suga told reporters in Tokyo when asked about the yen.
The yen is down more than 30 percent since Japanese Prime Minister Shinzo Abe came to power in 2012. It has depreciated further since US Federal Reserve Chair Janet Yellen last week said she expects to raise interest rates this year for the first time since 2006.
Kuroda said on Wednesday in Dresden, Germany, that it was desirable that “foreign exchange rates stay stable and reflect economic and financial fundamentals.”
Until last week, the yen had been trading in a range of just ￥2 around ￥120 per US dollar this quarter.
“Suga’s comments sparked yen selling to touch the key level,” said Yuji Saito, director of foreign exchange at Credit Agricole SA in Tokyo.
“The fact he just reiterated the globally confirmed view is taken by markets to be a tolerance” of yen weakness, Saito said.
Clearing the ￥124.14 level, which had held since June 2007, is merely symbolic and further declines are possible as speculation grows for a September US rate increase and the possibility of further BOJ easing, Saito said.
“The market is currently racing ahead in pricing in a rate hike for September,” said Koji Fukaya, chief executive officer and currency strategist at FPG Securities Co in Tokyo. “Whether the dollar keeps gaining will depend on data, and if next week’s jobs report is strong, that could change the picture. In that sense, next week is crucial.”
The yen has weakened 3.4 percent this month, poised for its worst slump since November last year. The Japanese currency tumbled 5.3 percent that month after the BOJ caught the markets off guard by expanding stimulus on Oct. 31.
Tokyo’s benchmark index rose for a 10th straight session yesterday, as a plunging yen drove it to the longest consecutive rally since the heady days of Japan’s stock market bubble more than a quarter of a century ago.
In heavy trading, the Nikkei 225 added 0.39 percent, or 78.88 points, to finish at 20,551.46, marking the longest winning streak since a 13-day run in February 1988.
The broader TOPIX climbed 0.69 percent, or 11.43 points, to 1,672.76
Shares of Toyota Motor Corp, which earlier this month booked a record annual profit, jumped 1.66 percent to ￥8,637, Sony Corp added 0.22 percent to ￥3,837, factory robotics giant Fanuc Ltd added 1.24 percent to ￥27,020 and Japan’s biggest lender Mitsubishi UFJ Financial Group Inc was up 2.31 percent to ￥917.3.
“It’s likely that the yen will continue to slowly weaken and we’ll have a global risk-on mode, stocks won’t rise too quickly, but they’ll have a steady climb,” Mitsushige Akino, executive officer at Ichiyoshi Asset Management told Bloomberg News.
Additional reporting by AFP
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