Japan finance minister flags readiness to take decisive steps on forex

TOKYO, March 16 : Japan Finance Minister Satsuki Katayama said on Monday that the government is prepared to take decisive steps against volatility in foreign exchange and other financial markets, as the yen sank close to the psychologically important 160-per-dollar line.

“There was shared concern among G7 finance ministers that markets, including foreign exchange, have been extremely volatile,” Katayama told parliament. “We are maintaining a stance of maximum vigilance, prepared to take decisive steps,” she added.

The strong warning from Katayama comes as the yen’s descent toward the critical 160-per-dollar level has put traders on guard for possible intervention by authorities in Japan.

When the yen weakened toward the level in January, the U.S., in apparent coordination with Tokyo, conducted so-called rate checks that often presage intervention, helping drive a rally in Japan’s currency.

But some policymakers privately say that intervening to prop ​up the yen now could prove futile, as the flood of dollar demand will ⁠only intensify if the war in Iran persists.

On Saturday, Katayama and her South Korean counterpart Koo Yun-cheol expressed concern about the rapid declines in their currencies in a joint statement, saying they were ready to act against excessive foreign-exchange volatility.