Japan. Government Comes To Yen’s Defense

The Japanese government of Fumio Kishida is ready to intervene in the foreign exchange market if it detects excessive fluctuations in exchange rates. The warning from Deputy Finance Minister Masato Kanda in charge of international affairs came as the Japanese currency was trading at 150 yen per dollar on the Tokyo Stock Exchange late Thursday, October 19. According to Japanese media, “the free fall of the currency of the Land of the Rising Sun may continue to a new historical low in the past 33 years – to 151 yen per dollar.”

“We remain firm in our policy that exchange rates should move steadily and in line with economic fundamentals,” Kanda said. In his opinion, “excessive volatility of the exchange rate can harm the real economy. It is recognized throughout the world that countries have the right to take appropriate action in this situation.”

The International Monetary Fund (IMF) said it had “noted recent volatility in the Japanese currency” and that it was constantly monitoring the situation. “The yen has been very volatile in recent weeks due to tightening monetary policy in the USA and other countries. We are closely monitoring the situation,” said in a written statement Ranil Salgado, head of the Fund’s representative office in Japan.

At the same time, the weak yen favored exports. According to the latest data from the Ministry of Finance in Tokyo, in September 2023, Japanese exports rose 4.3% year-on-year to a record 9,198 billion yen ($61.4 billion).  Exports of industrial products increased by 2.9%, vehicles by 21.2%. Overseas sales of Japanese cars rose 30.4 percent in September.

Japan’s foreign trade was boosted by the USA, which in September increased imports of goods and services labeled “made in Japan” by 13%, followed by the European Union (+12.9%), Australia (+12%), and India (+11.4%). At the same time, Japanese exports to China fell by 6.2%, to South Korea by 4.2%, and to Russia by 64.1%.