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Japan's top foreign exchange diplomat says that action will be taken to stop "speculative" yen moves

Image: Reuters Berita 24 English - Japan is ready to take action in the currency market and won't rule out any options to fix the "...

Image: Reuters

Berita 24 English - Japan is ready to take action in the currency market and won't rule out any options to fix the "clearly excessive volatility" seen in recent yen moves, the country's top currency diplomat said on Thursday, giving the strongest warning yet about the currency's fall to 24-year lows.

"Recently, the currency market has become more volatile. Especially in the last few days, speculative moves have caused the yen to fall quickly and in one direction. It's clear that this is a move that can be called too much volatility "Masato Kanda, who is the vice finance minister for international affairs, told reporters.

"The yen's recent quick moves can't be explained by fundamentals," he said, adding that the government and the Bank of Japan were "extremely worried" about the currency's drop.

"If these kinds of moves keep happening, the government is ready to act on the currency market and won't rule out any options," he said.

Kanda said, "Like I said, we won't rule out any options," when asked if buying the yen would be a possibility.

Kanda said these things on Thursday, after he met with officials from the Ministry of Finance, the Bank of Japan, and the Financial Services Agency (FSA) to talk about the world's financial markets.

The meeting is held when needed, usually to show the markets that the government is worried about sudden changes in the exchange rate. After the meeting, no written statement was put out.

When asked how long volatility had to last before Tokyo might act, Kanda said, "We'll look at market moves every day, and if we think something is wrong, we'll do something about it."

After Kanda's comments, the dollar fell to as low as 143.43 yen, but then it went back up to around 144 yen. It was last traded for around 144.02 yen, down from a 24-year high of 144.99 yen on Wednesday.

Authorities have talked more about the yen's fall, but this hasn't stopped it. Investors are still focused on the difference in policy between the U.S. Federal Reserve's aggressive interest rate hikes and the BOJ's plan to keep monetary policy very loose.

"Kanda's language didn't sound as if Tokyo is ready to intervene immediately, which is why the dollar moved back above 144 yen," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

Once a good thing for exporters, the weak yen is now giving Japanese policymakers trouble because it makes imports of fuel and raw materials even more expensive than they already are.

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