By Megumi Fujikawa
TOKYO--Japan's finance minister has issued a fresh warning to the currency market in the wake of Donald Trump's election victory, which sent the dollar sharply higher against the yen.
"We are watching developments in the currency market, including speculative moves, with an extremely high sense of urgency," Katsunobu Kato said at a news conference on Friday.
The use of the word "extremely" marked a change in phrasing that may have some significance, as the stronger language could well be interpreted by market participants as a hint that an intervention is around the corner.
The recent weakening of the yen looks "one-sided and rapid," the finance minister said, promising to take appropriate action against excessive moves.
The comments came as the yen's depreciation to a fresh three-month low against the dollar heightened market alarm over potential yen-buying intervention by the government. The renewed weakness has raised fears over higher import prices, also leading to speculation about additional rate increases by the Bank of Japan in the near term.
The dollar briefly strengthened to around 154.70 yen as Trump won the U.S. presidential election earlier this week. The possibility of higher tariffs under Trump has revived concerns over inflation in the U.S., which may eventually affect the pace of the Federal Reserve's future rate cuts.
The dollar-yen pair "is quickly approaching 155. Exceeding this level may increase the possibility of another forex intervention by the MOF [Ministry of Finance], and the BOJ may also counter with a rate hike," said Citi strategist Tomohisa Fujiki.
The dollar was last at 152.80 yen.
The Japanese central bank raised its policy interest rate to 0.25% at the end of July after the yen weakened to around 162 against the dollar earlier that month. BOJ Gov. Kazuo Ueda said at the time higher import prices triggered by a weak yen was one of the reasons behind the decision.
The rise in import prices has interfered with a recovery of consumption in Japan, a key component of the so-called virtuous cycle of higher wages and steady inflation that the BOJ has been trying to create.
The government also tried to prop up the Japanese currency by conducting yen-buying and dollar-selling operations worth 3.168 trillion yen on July 11, equivalent to about $20.71 billion, and operations of 2.367 trillion yen on the following day, finance ministry data showed on Friday.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
(END) Dow Jones Newswires
11-08-24 0105ET
