Japan Considers Unilateral Yen Intervention Post Brexit: Nikkei

  • Unnamed MOF official cited saying plan in ‘national interest’
  • Yen surged to 99.02 versus dollar on Friday after U.K. vote

Japan’s government and central bank are considering measures, including unilateral intervention in the currency market, to counter any abrupt gains in the yen, the Nikkei newspaper reported.

Intervention may take place if yen demand jumps abruptly following U.K.’s vote to leave the European Union, and there is enough pressure on the economy and inflation, the newspaper reported Saturday. It cited an unnamed Finance Ministry official as saying action is possible even without U.S. approval in a “fight’’ to protect ‘‘national interests.” Calls to the ministry and the Bank of Japan outside business hours weren’t answered.

Japanese authorities voiced growing concern at the yen’s surge past 100 per dollar for the first time since November 2013 as the U.K. voted to leave the EU on Friday. While Finance Minister Taro Aso said he’s ready to act in markets if needed, he declined to comment on potential unilateral intervention or coordinated action with Group of Seven counterparts.

Japan’s Ministry of Finance views unilateral intervention as an unlikely tool in the event of a surge in the yen should the U.K. vote to leave the European Union, people familiar with the matter said before the referendum. A joint intervention with G-7 partners would be preferred, and it’s unlikely they would be supportive of Japan selling yen on its own, they said.

G-7 Chiefs

G-7 finance chiefs said after a conference call on Friday they will “continue to consult closely on market movements and financial stability, and cooperate as appropriate.” Officials recognized that “excessive volatility and disorderly movements in exchange rates” can harm economic and financial stability and pledged to use“established liquidity instruments” to support the functioning of markets.

Japan’s currency strengthened as much as 7.2 percent to 99.02 per dollar on Friday, and climbed against all 16 of its major peers, before closing at 102.22.

After four consecutive years of declines, the yen has advanced almost 18 percent this year against the greenback in the best performance among developed nations, amid concern a Brexit would drag down already-tepid global growth. It gained at the start of the year on speculation China and the U.S., the world’s largest economies, would struggle to overcome headwinds.

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