EXCLUSIVE: Japan Official Calls Forex Intervention “Ultimate Means”

Tokyo, June 4 (Jiji Press)–A foreign exchange market intervention is the “ultimate means of sending a message” to market participants, Japanese Vice Finance Minister for International Affairs Atsushi Mimura said during a recent interview with Jiji Press. Such intervention should be used when foreign exchange market moves that clearly deviate from economic fundamentals persist, he said. The Japanese government and the Bank of Japan conducted foreign exchange market interventions totaling over 11 trillion yen between April 28 and May 27. Mimura said that the yen’s depreciation had far exceeded the range deemed justifiable by the Japan-U.S. interest rate gap, and that speculative short positions in the yen had built up. “At some point, the yen will inevitably converge to a level commensurate with fundamentals,” he said, adding that the authorities responded accordingly while monitoring changes in external factors. In September last year, then Japanese Finance Minister Katsunobu Kato and U.S. Treasury Secretary Scott Bessent released a joint statement recognizing currency intervention as a means to tackle excessive market fluctuations. At a meeting in Tokyo on May 12, Japanese Finance Minister Satsuki Katayama and Bessent affirmed cooperation based on the statement. Referring to the statement in the interview, Mimura said, “It was the first time that we recognized on paper that an intervention could be a valid approach against both a stronger and weaker yen.” He emphasized that Japan and the United States were in complete agreement on foreign exchange-related issues. On the possibility of intervening in the crude oil futures market, which has been a factor behind fluctuations in the foreign exchange market since tensions in the Middle East escalated, Mimura said, “As of now, we have a framework firmly in place that would allow us to do so if we chose to.” END [Copyright The Jiji Press, Ltd.]