Japan's finance minister said on Tuesday that authorities would not rule out any option in handling excessive currency volatility, underscoring warnings that have left investors and traders wary of intervening to support the weak yen.
Pressured by the applied monetary policy, the yen has weakened in several days towards 150 yen for every dollar, a level that financial markets see as a red line that will prompt the Japanese authorities to intervene, as they did last year.
"Excessive instability is undesirable," minister Shunichi Suzuki told reporters. Then when the yen fell above 149 yen to the dollar, the lowest since October 2022, he said "we are closely monitoring currency movements."
The warning prompted a small strengthening in the yen, showing how sensitive the market is to the potential for intervention.
The minister signaled that Japan is trying to get the agreement of its main Group of Seven (G7) partners to take action if necessary.
"We share the view with the US and other authorities that excessive instability is undesirable," Suzuki said.
Analysts doubt Japan can get US agreement to intervene by selling dollars for yen because that could worsen high inflation in the US.
Suzuki's warning follows Prime Minister Fumio Kishida's official order to his cabinet to prepare a new economic package aimed at reducing the burden of rising prices, including food and energy.
