(Bloomberg) -- Japan's top currency official Masato Kanda pledged to take appropriate action against excessive swings in the foreign exchange market, saying he sees speculative moves behind the yen's plunge earlier Wednesday to a 34-year low.
“The recent weakening of the yen cannot be said to be in line with fundamentals, and it is clear that speculative moves are behind the yen's fall,” Kanda told reporters. “We will take appropriate action against excessive moves without ruling out any options.”
Kanda spoke to reporters Wednesday evening in Tokyo after meeting with officials from the Bank of Japan and Financial Services Agency in their first three-way discussions since late May.
Attending the meeting were Kanda, FSA Commissioner Teruhisa Kurita and the BOJ's head of policy, Seiichi Shimizu.
Several hours before the meeting was convened, Finance Minister Shunichi Suzuki issued the strongest warning regarding currencies in recent months, saying that the government will take bold measures against excessive moves, without ruling out any options. The reference to bold action is generally interpreted to mean direct intervention in the currency market.
Authorities in Tokyo spent ¥9.2 trillion ($60.6 billion) in 2022 to prop up the yen on three occasions, after a slump that at one point propelled the dollar as high as 151.95 yen. The yen buying was Japan's first intervention to support its currency since 1998.
The yen's recent weakness is partly driven by market expectations that interest-rate differentials between Japan and the US will remain wide even after the BOJ ended the world's last negative interest-rate regime last week.
The central bank's most hawkish board member Naoki Tamura said earlier in the day that he favors a gradual process toward normalization. Tamura also said that keeping the policy environment easy doesn't rule out rate hikes.
Kanda said the BOJ would consider addressing the currency situation with monetary policy if foreign exchange moves were to have a significant impact on the economic and price outlook.
(updates with comments from Kanda)
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