Stealth forex intervention aimed at maximizing impact: Japan minister

Foreign currency interventions, when conducted unannounced, are designed to maximize the effect of correcting rapid currency moves and such operations are effective "to a certain degree," Finance Minister Shunichi Suzuki said Tuesday.

Suzuki reiterated Japan will take appropriate action to address excessive volatility in the currency market by keeping close tabs on developments with a high sense of urgency.

His remarks came as the U.S. Federal Reserve is expected to go ahead with another rate hike at its policy meeting this week, a decision that would widen the interest rate differential between the two nations.

Following the yen's biggest drop in over three decades, Japan spent a record 6.35 trillion yen ($43 billion) in October in what were seen as multiple interventions to slow the yen's fast depreciation against the U.S. dollar, on top of 2.84 trillion yen the month before, ministry data showed Monday.

"There are times when we make announcements after we intervene while at other times we don't," Suzuki told a press conference. "The aim is to maximize the effect of correcting rapid currency fluctuations."

"We cannot tolerate excessive volatility caused by speculators," the finance chief added.

Japan announced it intervened on Sept. 22, its first yen-buying, dollar-selling operation since 1998, but it kept silent thereafter. The ministry data for the period from Sept. 29 to Oct. 27, however, showed the government had carried out at least one "stealth" intervention, intended to keep market participants guessing about whether authorities were actually in the market.

After the first round on Sept. 22, Japanese authorities likely intervened at least twice, on Oct. 21 and 24, sending the yen sharply higher against the dollar in a short span of time.

The yen's recent weakness reflects the diverging monetary policies of Japan and the United States. The Bank of Japan is in no hurry to tighten its monetary policy while its global peers, including the Fed, have been raising rates to tame surging inflation.

© Kyodo News