As the Japanese yen fell to its lowest level in 40 years, Japan's top foreign exchange official said the government's intervention in the currency market had been effective. He also said Tokyo is in close communication with the U.S. government on foreign exchange issues.
Mimura Atsushi, the Finance Ministry official in charge of foreign exchange policy operations, said in an interview with Bloomberg on the 1st (local time) that he believes the Japanese government's market intervention that began two months ago was "clearly a meaningful step, judging by market moves."
He also emphasized that the United States has never expressed opposition to Japan's market intervention.
Mimura said, "The U.S. side has never made remarks opposing our actions, and, if anything, there have been more supportive views."
He added, "We are in contact with the U.S. side far more often than people think, through phone calls and emails."
Bloomberg interpreted Mimura's remarks as showing the Japanese government's resolve not to leave unchecked further increases in energy and food prices driven by the weak yen, and also suggests that the United States is, to some extent, tolerating Japan's market intervention.
The yen/dollar rate was trading around 162.70 yen per dollar on the afternoon of the 1st in Japan. That is the lowest level since 1986. On the 30th, it rose to 162 yen, surpassing what had been seen as a psychological resistance line, the low in Jul. 2024 (161.96 yen).
According to the Finance Ministry, Japanese authorities injected a record 11.73 trillion yen (about 112 trillion won) into the market over about a month starting at the end of Apr. to defend the yen.
Japan imports more than 90% of its energy, including crude oil and liquefied natural gas (LNG), and more than 60% of its food. Because most of it is settled in U.S. dollars, a weaker yen raises import prices and adds upward pressure on domestic prices.
However, Bloomberg said that despite large-scale intervention by the authorities, the yen's weakness has persisted, increasing the burden on how often the Japanese government will intervene going forward and whether the effects will last.