Japan’s top currency official said that recent yen weakness is odd and out of line with current economic fundamentals, reaffirming his commitment to act if needed to prevent excessive swings in the exchange rate.
“I strongly feel the recent sharp depreciation of the yen is unusual, given fundamentals such as the inflation trend and outlook, as well as the direction of monetary policy and yields in Japan and the US,” Japanese Vice Minister for International Affairs Masato Kanda said in an interview yesterday. “Many people think the yen is now moving in the opposite direction of where it should be going.”
Kanda’s remarks come amid intense market scrutiny over whether the government would step into the currency market to stem recent falls in the yen, following the Bank of Japan’s decision last week to raise interest rates for the first time since 2007. The currency slid to a 34-year low of ￥151.97 per US dollar on Wednesday, prompting Japanese Minister of Finance Shunichi Suzuki to increase verbal warnings, strongly hinting that Japan could intervene.
Photo: Bloomberg
Finance authorities also convened a three-way meeting, a gathering often used to show heightened concern among policymakers over market movements.
“We are currently monitoring developments in the foreign exchange market with a high sense of urgency,” Kanda said. “We will take appropriate measures against excessive foreign exchange moves without ruling out any options.”
Kanda reiterated the view that Japan is not guarding specific exchange rate levels, but is looking at the direction and speed of movements when assessing developments in the currency market, echoing Suzuki’s comments.
Japan had no defense line on exchange rates, Suzuki said when asked whether the ￥152 mark against the US dollar was a line in the sand.
Tokyo’s biggest intervention splurge was in 2022, after the yen approached 152, though the slide in that direction was much more rapid than currently seen.
Market participants try to gauge the proximity to possible market intervention from the language used by authorities.
“I am just saying what I think is right at the time,” Kanda said, referring to his choice of words.
Behind the yen’s weakness is the view among market players that the difference in policy rate and yields between Japan and its peers, including the US, would remain wide for some time.
Bank of Japan Governor Kazuo Ueda pledged to maintain an accommodative environment when the bank decided to raise its benchmark interest rate last week — ending the world’s last negative rate — pouring cold water on expectations that the bank would soon consider a second hike.
He favors a gradual process toward normalization, but keeping policy easy is not inconsistent with another rate hike, Bank of Japan board member Naoki Tamura said.
The Bank of Japan’s decision was a milestone that showed a virtuous price-wage cycle was in place, with sustainable inflation in sight, Kanda said, adding that strong wage gains during this year’s annual wage negotiations and record spending by companies were positive signs for Japan’s economy.
“Finally we are in an economic situation that enables the Bank of Japan to begin normalization,” Kanda said. “We have come a long way.”
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said its materials management head, Vanessa Lee (李文如), had tendered her resignation for personal reasons. The personnel adjustment takes effect tomorrow, TSMC said in a statement. The latest development came one month after Lee reportedly took leave from the middle of last month. Cliff Hou (侯永清), senior vice president and deputy cochief operating officer, is to concurrently take on the role of head of the materials management division, which has been under his supervision, TSMC said. Lee, who joined TSMC in 2022, was appointed senior director of materials management and
Gudeng Precision Industrial Co (家登精密), the sole extreme ultraviolet pod supplier to Taiwan Semiconductor Manufacturing Co (台積電), yesterday said it has trimmed its revenue growth target for this year as US tariffs are likely to depress customer demand and weigh on the whole supply chain. Gudeng’s remarks came after the US on Monday notified 14 countries, including Japan and South Korea, of new tariff rates that are set to take effect on Aug. 1. Taiwan is still negotiating for a rate lower than the 32 percent “reciprocal” tariffs announced by the US in April, which it later postponed to today. The
MAJOR CONTRIBUTOR: Revenue from AI servers made up more than 50 percent of Wistron’s total server revenue in the second quarter, the company said Wistron Corp (緯創) on Tuesday reported a 135.6 percent year-on-year surge in revenue for last month, driven by strong demand for artificial intelligence (AI) servers, with the momentum expected to extend into the third quarter. Revenue last month reached NT$209.18 billion (US$7.2 billion), a record high for June, bringing second-quarter revenue to NT$551.29 billion, a 129.47 percent annual increase, the company said. Revenue in the first half of the year totaled NT$897.77 billion, up 87.36 percent from a year earlier and also a record high for the period, it said. The company remains cautiously optimistic about AI server shipments in the third quarter,
Nvidia Corp CEO Jensen Huang (黃仁勳) on Thursday met with US President Donald Trump at the White House, days before a planned trip to China by the head of the world’s most valuable chipmaker, people familiar with the matter said. Details of what the two men discussed were not immediately available, and the people familiar with the meeting declined to elaborate on the agenda. Spokespeople for the White House had no immediate comment. Nvidia declined to comment. Nvidia’s CEO has been vocal about the need for US companies to access the world’s largest semiconductor market and is a frequent visitor to China.
RSS