Japan signals readiness
to intervene as Brexit boosts yen
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[June 24, 2016]
By Tetsushi Kajimoto and Minami Funakoshi
TOKYO (Reuters) - Japan will respond as
needed to "extremely nervous" currency moves following Britain's vote to
leave the European Union, Finance Minister Taro Aso said on Friday,
signaling a readiness to intervene to stem excessive yen strength.
Aso declined to comment when asked about the possibility of coordinated
intervention in currency markets, or whether Japan had intervened to
stem strength in the yen, which soared above 100 to the dollar, due its
safe haven status.
"I'm extremely concerned about the risk (Brexit) has on the global
economy, financial and currency markets," Aso told reporters.
"Current exchange-rate markets are showing extremely nervous movements.
In order to prevent such moves from continuing, I'll closely watch
currency market moves more than ever with a sense of urgency and will
respond firmly when necessary."
In a joint statement, Aso and Bank of Japan Governor Haruhiko Kuroda
stressed that currency market stability was "crucially important" as
excess volatility and disorderly exchange-rate moves hurt the economy.
"The Ministry of Finance will monitor further developments of the
foreign exchange market more carefully than before and take appropriate
measures as necessary. Such measures are consistent with the agreements
in G7 and G20," the statement said.
The yen has attracted strong demand amid Brexit fears. The dollar
briefly dropped as low as 99.00 yen on Friday, the first time it
breached the 100 mark since late 2013.
The yen's renewed spike adds to headaches for Japanese policymakers, who
worry about the damage it could inflict on exports and an already
fragile economic recovery.
Japanese Prime Minister Shinzo Abe instructed Aso to work closely with
the BOJ and other G7 advanced economies to take necessary steps to
stabilize financial markets and the economy.
"As G7 host, Japan will strive to stabilize financial markets and global
economic growth," Abe told reporters. "We need to respond firmly (to
Brexit). What is needed is international cooperation."
Senior officials from the MOF, the BOJ and the Financial Services Agency
will hold a meeting on Saturday to discuss global market moves, a MOF
official said on Friday.
[to top of second column]
Japan's Finance Minister Taro Aso (C) speaks to the media after a
meeting of relevant cabinet ministers to discuss Britain's exit from
the European Union, at Prime Minister Shinzo Abe's official
residence in Tokyo, Japan, June 24, 2016. REUTERS/Issei Kato
In the joint statement with Aso, the BOJ pledged to take appropriate
measures, including activating an existing currency swap arrangement
with other central banks, to prevent foreign currency funding from
The yen's sharp appreciation and slumping Tokyo stocks will add pressure on the
BOJ to expand monetary stimulus, possibly at an emergency meeting before a
scheduled rate review next month.
BOJ Deputy Governor Hiroshi Nakaso declined to comment on reporters' queries
whether the central bank would hold an emergency meeting to ease policy.
But senior BOJ officials have not ruled out the chance of holding such a
meeting, signaling the central bank's readiness to act if risks threatened to
undermine Japan's fragile economic recovery.
The BOJ has held off on expanding stimulus after adopting a negative interest
rate policy in January. Its next scheduled policy-setting meeting is set for
July 28 and 29.
A summary of discussions at the BOJ's June rate review showed on Friday that
central bank policymakers were deeply divided on whether to top up or taper its
massive asset-buying program.
(Additional reporting by Stanley White and Leika Kihara; Writing by Leika Kihara;
Editing by Clarence Fernandez and Nick Macfie)
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