(Bloomberg) -- Japan will take action if there are excessive movements in the yen, its finance minister warned Tuesday as weakness in the currency continues.
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"I'm deeply concerned about recent currency moves, including those driven by speculators," Japanese Finance Minister Katsunobu Kato told reporters, reiterating his warnings from last week. "The government will take appropriate action against excessive FX moves."
The yen strengthened against the dollar following his remarks to briefly touch 157.06, having reached 157.39 just before the finance minister spoke.
Kato's remarks came with the yen under renewed pressure since last week, driven largely by the view that the gap between US and Japanese interest rates will take longer to narrow.
The yen experienced a sharp slide last week following the Bank of Japan's stand-pat decision and Governor Kazuo Ueda's comments indicating the possibility of a later-than-expected rate hike in March or beyond. Ueda hinted that he wanted to see more developments in ongoing wage negotiations and the US policies before raising rates.
While the Federal Reserve cut US rates last week as widely forecast, it lowered its expected number of rate cuts in 2025, to put pressure on the yen.
Some market participants see the yen weakening further over the coming days with thin liquidity during the year-end holidays.
Low liquidity also presents policymakers in Japan with a potential opportunity to have a relatively larger impact on the currency level if they do step into the market.
Authorities have stayed out of the market since July, when the yen hit 160 against the dollar. Tokyo has spent close to $100 billion propping up the yen so far this year.
Before taking such steps, countries are normally required to communicate with their foreign counterparts.
When asked about communication with the incoming US administration under President-elect Donald Trump, Kato said he would like to continue close communication with authorities overseas, not only on foreign exchange matters but also in general.