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00:00You've said before that Japan should take action if dollar yen breaks above 130. We did reach those levels a few days or weeks ago but they didn't. At what point do you think the BOJ will intervene in the currency market. How likely is that now. Well it's not likely. Intervention is only effective when you know I agreed with the other party. But I don't think that you know this has to be agreed to intervene at this moment. You know the development seems to be favorable to the US and the intervention would not be approved by the United States. So that I think intervention at this moment is very difficult. Let's go back to late 1990s when you were at the MOF It was the middle of the Asian financial crisis. You had dollar yen north of 130 and the US joined the BOJ to buy yen at the time. What did you learn from that experience. You know G-7 you including the United States and Japan. You know me maybe six times seven times a year so that they knew each other quite well. So that you know communication isn't that difficult. Take for example when I was there I basically self finance. My counterpart in the United States was Larry Summers and we conducted with each other quite often particularly when something happens in the market. So barring any kind of coordinated intervention do you see anything that the BOJ can do. They did. They didn't take the last meeting to try to adjust their yield curve control. But do you see in the near future are they going to have to address this. The central bank is not that much worried about depreciation that kind of at this moment. This has happened because of the difference of the monetary policy of the two two countries. So that no reason is really clear. It's not the Japan selling. So that I don't think that neither Bank of Japan or Japanese government is worried about the current state of affairs with regard to the exchange rate. When is the weaker yen going to be a problem for the BOJ. At what level do you think it becomes intolerable. Well it's very difficult. It depends upon the case. If you end up on what would be the sort of state of affairs of the Japanese economy but the But but the market expects a yen dollar would probably go to dollar 150. And you know if it goes beyond 150 then I think you know Bank of Japan would be somewhat you know concerned. So so do you see it going to 150. How much lower do you think the yen can go. Well you know market the expectation is that towards the end of the year it will go between 140 and 150. So that date is quite possible that yen would reach that river. You mentioned that they're not too worried about a weaker yen at this point. But net net do you think a weaker yen is good or bad for the Japanese economy. Well it's not that good. But at this level it's not to such an ecliptic our sort of situation. You know we could tolerate it even if it goes to 140 150 in terms of the BOJ hiking rates. Is that you know when do you ever see that actually happening. Well it depends upon the conditions of the Japanese economy at the moment. But you know deflation period is over. Under Japanese places continued to increase so that there would be a time when Japanese economy gets a little bit overheated. And at that time maybe toward the end of this year or early next year Bank of Japan may raise interest rates. And I think the market expect the raising of interest rate to happen sometime next year toward the summer.

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Mr. Yen Says Currency May Weaken to 150 Level

The yen has the potential to drop to levels last seen in 1990 on Japan’s deepening monetary policy divergence with the US, Eisuke Sakakibara said. Nicknamed “Mr Yen” for his ability to influence the currency during his tenure as Japan’s vice finance minister, Sakakibara, speaks to Bloomberg's Yvonne Man. (Source: Bloomberg)

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