Japan is closely monitoring currency market positions, including speculative bets, as excessive volatility in exchange rates is considered undesirable, Atsushi Mimura, the nation’s top currency diplomat, stated on Tuesday.
“We are actively observing speculative positions daily because excessive volatility or disorderly currency movements are not in line with the G7 agreement on exchange rates,” said Mimura, Vice Finance Minister for International Affairs, during a Reuters NEXT Newsmaker event.
Commenting on the upcoming Bank of Japan (BOJ) policy meeting, Mimura emphasized the close communication between the government and the central bank. “I regularly share my views with the BOJ, and they are likely gathering information on markets and annual wage negotiations,” he said.
Meanwhile, the dollar rebounded during volatile Asian trading on Tuesday, following U.S. President Donald Trump’s comments suggesting potential tariffs on Canada and Mexico. The dollar strengthened 0.3% against the yen to 156.06, recovering from a five-week low of 154.90.
A weaker yen remains a challenge for Japanese policymakers as it drives inflation higher by increasing import costs, thereby dampening consumer spending. Analysts have partly attributed the yen’s weakness to the BOJ’s ultra-loose monetary policy and its gradual approach to raising interest rates.
Mimura underscored the importance of boosting consumption by turning real wages positive. “The outlook for real wages is crucial. A weaker yen contributes to inflation by increasing import costs,” he noted.
The BOJ is anticipated to raise interest rates on Friday, barring unexpected market disruptions from Trump. If implemented, this would bring short-term borrowing costs to their highest levels since the 2008 global financial crisis, according to sources cited by Reuters.
