Tokyo waits, watches as yen displays some muscleJapanese Finance Minister Taro Aso said the government won’t intervene in the currency market for now after the yen strengthened by the most in three years against the dollar.
“We are carefully watching, but we don’t have any immediate intention of taking any action, such as intervention,” the finance minister said yesterday in Tokyo.
Japan’s currency surged 2.2 percent Thursday, adding to the headwinds of a slide in stocks and volatility in bonds as Prime Minister Shinzo Abe campaigns to revive the world’s third-biggest economy. As attention turns to a Bank of Japan meeting on Monday and Tuesday, Gov. Haruhiko Kuroda’s actions may be limited by his pledge to avoid “incremental” steps after announcing a plan to double the monetary base over two years.
“Stocks rose and the yen weakened between November and May at a very rapid pace, driven by expectations for Abenomics and Kuroda-nomics, exceeding the pace of the economy’s fundamental improvement,” said Hiroaki Muto, a senior economist in Tokyo at Sumitomo Mitsui Asset Management. “The markets are now going through an adjustment phase from the too-rapid moves.”
Muto said the “adjustment” is probably temporary because the Japanese economy is making gains. At the same time, he said the government may consider another jolt of fiscal stimulus.
“The markets will focus on improvements to Japan’s real economy and will eventually factor this in and respond accordingly,” Economy Minister Akira Amari said yesterday.