Japan's currency market interventions are designed to fix volatile fluctuations driven by speculators and the country stands ready to act when required as rapid movements cannot be left unaddressed, Finance Minister Shunichi Suzuki said Tuesday.
Suzuki rejected the claim that the government and the Bank of Japan are moving in opposite directions, with the former stepping into the market to arrest the yen's weakness while the central bank is pursuing an ultralow rate policy that is blamed for speeding up the currency's decline.
"Monetary easing is aimed at achieving stable and sustainable price increases accompanied by wage growth, while currency intervention is intended to cope with excessive volatility, so they have different policy objectives. They are not contradictory," Suzuki said at a press conference.
"The important thing is volatility. We cannot leave rapid moves unaddressed because such moves by speculators would have a big impact on business decisions and households. We need to correct such moves," he added.
His remarks came a day after a suspected intervention in the market by Japanese authorities to buy the yen in exchange for the U.S. dollar. Japan has not confirmed whether it stepped in after spending up to 2.84 trillion yen ($19 billion) on Sept. 22 and then an estimated 5.5 trillion yen on Friday in a battle to slow the yen's rapid depreciation.
"We will continue to monitor developments in the market closely and take necessary action when needed," Suzuki said.
The yen, which neared 152 against the dollar last week, was trading around the 149 line on Tuesday. The BOJ is scheduled to hold a two-day meeting from Thursday at which its Policy Board is widely expected to reaffirm its commitment to ultralow rates.
The Japanese currency's fall to levels unseen in over three decades has raised concern about the impact on the economy, with import costs for the resource-scarce country inflated. Japanese households have to pay more for energy and everyday goods, while companies need to pass on higher input costs to remain profitable.
About half of the recent pickup in inflation can be blamed on surging commodity prices and the other half on the weaker yen, Suzuki said, with the yen's impact increasing from about a third this spring.
The government is planning to compile an economic package later this month to alleviate the pain of accelerating inflation on households and support the economy.
