2024-04-18 00:06:00
At the first finance ministers’ meeting held on the 17th, Japan, the United States, and South Korea agreed to “closely discuss” trends in the foreign exchange market. Photographed in December 2015 (2024 Reuters/Kim Hong-Ji)
WASHINGTON (Reuters) – Japan, the United States, and South Korea agreed to “closely consult” on foreign exchange market trends at their first finance ministers’ meeting held on the 17th.
The joint statement acknowledged the “serious concerns of Japan and South Korea regarding the recent rapid depreciation of the yen and won,” and added, “In line with the existing G20 commitments, we will continue to monitor trends in the foreign exchange market.” We will consult closely.”
“We will continue to work together to promote sustainable economic growth, financial stability, and orderly and well-functioning financial markets.”
Following the announcement of the statement, the dollar fell against the yen. 1 dollar = 154.18 yen. It has since returned to 154.32 yen, but remains below the 34-year high of 154.79 yen reached on the 16th.
The last time Japan intervened in foreign exchange was in October 2022, when the dollar was at 151.94 yen.
Helen Given, a foreign exchange trader at Monex USA in Washington, said the latest statement could set the stage for market intervention by the government and the Bank of Japan. He said: “The wording is quite strong so it wouldn’t be surprising to see some concrete movement by the end of the week.”
Finance Minister Shunichi Suzuki also held a bilateral meeting with U.S. Treasury Secretary Janet Yellen on the 17th, and told reporters that the two countries were prepared to “respond appropriately to any excessive moves.” He did not go into details.See more
Finance Minister Masato Kanda said he would not rule out any options in dealing with excessive yen movements.
Mr. Kanda declined to comment on questions about the possibility of coordinated intervention to curb the dollar’s rise.
“In the past few intervention cycles, U.S. officials (particularly Ms. Yellen) have issued statements acknowledging Japan’s motives and expressed verbal support,” said Karl Schamotta, chief market strategist at Kopay.
“From a strategic perspective, foreign exchange intervention is much more likely to be successful if it is carried out through international coordination. Unilateral intervention can help reduce volatility, but it can weaken the yen due to long-term interest rate differentials. “It’s not enough to reverse it.”
Masafumi Yamamoto, chief foreign exchange strategist at Mizuho Securities, pointed out that if the dollar/yen pair breaks above 155 yen, it is unclear whether the Japanese authorities will intervene.
With a strong U.S. economy delaying the Federal Reserve’s interest rate cuts and pushing up the dollar, authorities likely believe that unilateral intervention will have a short-lasting effect, he said.
“Together, we affirm our commitment to use and coordinate national sanctions tools to hold Russia accountable for its war against Ukraine and to target North Korea’s weapons programs,” the statement added. .
“The importance of concerted action to overcome the potential for supply chain vulnerabilities and non-market practices in other countries to harm our economy, including economic coercion and overcapacity in key sectors. It emphasizes sexuality.”
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