Japan watching forex moves closely, stability important: minister

Japanese Finance Minister Shunichi Suzuki said Friday the government is carefully watching developments in the currency market as stability is important, in response to the yen’s recent sharp fall relative to the U.S. dollar.

Speaking at a press conference, Suzuki stressed that currency movements should reflect economic fundamentals. The dollar traded in the lower 148 yen zone on Friday morning in Tokyo, roughly 3 yen higher than its levels on Monday.

The yen’s renewed weakness reflects a widening interest rate gap between Japan and the United States amid receding expectations of a rate cut by the Federal Reserve.

“It’s important that currency moves are stable, reflecting fundamentals,” Suzuki said. “We will continue to monitor forex markets carefully.”

The Bank of Japan will hold a two-day policy meeting next week at a time of uncertainty over the impact of a deadly earthquake that hit central Japan on New Years’ Day.

Market participants speculate that the central bank will end its negative interest rate policy this year.

“We expect the BOJ to continue coordinating closely with the government and guide policy appropriately to attain its price stability target stably and sustainably,” Suzuki said.

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