Japan's top currency diplomat Atsushi Mimura warned that summer's yen-buying intervention is still fresh as the dollar neared 160 yen. Mizuho Securities analysts say a break above that level could bring unilateral action from Tokyo.
Atsushi Mimura, Japan's top currency diplomat, warned markets on Thursday as the yen again edged towards the key level of 160 to the dollar. In his first remarks on foreign exchange since late September, he said he believed recent currency moves have been excessively rapid.
Mimura pointed back to the summer. According to Mimura: "It’s still too early to forget what happened this summer." He was referring to Japan's yen-buying interventions in late July through early August, including one run jointly with the United States.
Dollar hits 159.94 on Fed rate expectations
The dollar rose to 159.94 against the Japanese yen early on Thursday, its strongest in more than two months. Growing expectations that the Federal Reserve will raise interest rates, after hot US inflation data and hawkish remarks from policymakers, buoyed the dollar.
Japan last intervened on three days between July 30 and August 3, spending a record total of 15.4 trillion yen over the month. The yen had reached its weakest levels in 40 years, near 164 per dollar.
Weak yen lifts import costs
The weak yen has been a headache for Japanese policymakers as import costs have surged. The yen-based import price index jumped 24.8% in October from a year earlier, data showed on Thursday.
Chief Cabinet Secretary Minoru Kihara said at a regular news conference that the government generally views an undervalued yen as problematic. He added that Tokyo will keep close communication with the US Treasury through the finance ministry.
Analysts at Mizuho Securities said the dollar was likely to keep rising against the yen. They flagged the risk of Japanese intervention if the dollar breaks above 160 and the weaker yen fuels inflation, raising the risk of lower support for Prime Minister Sanae Takaichi's government.
Source: Investing.com (Reuters)
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