Japan Clarifies Abe's Remarks on Arbitrary Currency Interventionby
Abe was repeating the G-20's commitment on FX, Suga Says
Yen continues to strengthen against dollar despite comments
Prime Minister Shinzo Abe’s recent statement that nations should "refrain from arbitrary intervention in currency markets" was not new but a repetition of what had been agreed by the Group of 20 countries, the government’s chief spokesman said.
"Especially in markets, attention has been paid to Prime Minister Abe’s comments that arbitrary currency intervention should be avoided," Chief Cabinet Secretary Yoshihide Suga said at a press conference in Tokyo on Thursday. "This was the prime minister pointing out what was agreed on at the G-20 meeting in February."
The comments came as the yen strengthened against the dollar and after repeated comments from Suga and other officials that they were "watching markets." The currency is now back where it was before the Bank of Japan expanded stimulus in October 2014. It has gained about 14 percent since a peak in June.
"The verbal intervention won’t be enough to change the course of the yen," said Kazuhiko Ogata, Credit Agricole’s chief Japan economist. "Japanese officials are trying hard to put out the fire that’s causing the yen gains."
The yen continued to strengthen after Suga’s comments, trading at 108.82 per dollar at 2:35 p.m. in Tokyo.
"Whatever the circumstances, we must definitely avoid competitive devaluation, and I think we should refrain from arbitrary intervention in currency markets,” Abe said in comments to the Wall Street Journal earlier this week.
"I see one-sided moves in the foreign exchange market now,” Suga said on Thursday, echoing comments from a Ministry of Finance official earlier in the day. “We monitor the markets with a sense of vigilance and will take necessary action as needed.”