Japan ramps up warning of currency intervention in bid to fight fall in yen

Central bank to debate ‘feasibility, timing’ of an interest rate hike in upcoming meetings

- 

Japan on Nov 21 escalated its warning of currency intervention and the central bank governor signalled the chance of a near-term interest rate hike, as the authorities sought to combat unwelcome yen falls blamed for pushing up the cost of living.

The yen is down around 6 per cent since Prime Minister Sanae Takaichi was elected leader of her party on market concern that her administration could issue more debt to fund a big spending package, casting doubt on Japan’s grip on finances.

The currency’s fall has also been driven by market bets that Ms Takaichi, known as an advocate of expansionary fiscal and monetary policy, could push back against a near-term rate hike.

Finance Minister Satsuki Katayama said Japan sees intervention in the foreign exchange market as a possibility in dealing with excessively volatile and speculative moves in the yen, issuing the strongest warning to date against recent falls in the currency.

Bank of Japan (BOJ) governor Kazuo Ueda also said the central bank will debate the “feasibility and timing” of a rate hike in upcoming meetings, signalling the prospect of increasing still-low borrowing costs as soon as December.