Japanese officials worrying that the yen is sliding too fast are getting little traction.
The currency tumbled to 124.46 per dollar on Thursday, its lowest since 2002, even as Japan's Chief Cabinet Secretary Yoshihide Suga expressed concern about the sort of sudden exchange-rate moves the Group of 20 nations has said it would prefer not to see and Finance Minister Taro Aso today called recent movements in the currency "rough." Bank of Japan Governor Haruhiko Kuroda told CNBC that major currencies are in line with economic fundamentals.
"As agreed by the G-20, sudden moves in foreign-exchange markets are undesirable, and for the latest moves, we'd like to continue to monitor carefully," Suga told reporters in Tokyo when asked about the yen.
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Japan's currency is down more than 30 percent since Prime Minister Shinzo Abe came to power in 2012. It has depreciated further since Fed Chair Janet Yellen said last week she expects to raise interest rates this year for the first time since 2006. Kuroda said on Wednesday in Dresden, Germany, that it's desirable that "foreign exchange rates stay stable and reflect economic and financial fundamentals." Aso said in Dresden Thursday that he'll continue to monitor movements in the currency.
Until last week, the yen had been trading in a range of just two yen around 120 per dollar this quarter.
"Suga's comments sparked yen selling to touch the key level," said Yuji Saito, director of foreign exchange at Credit Agricole SA in Tokyo. "The fact he just reiterated the globally confirmed view is taken by markets to be a tolerance" of yen weakness, he said.
Clearing the 124.14 level, which had held since June 2007, is merely symbolic, and further declines are possible as speculation grows for a September U.S. rate rise and the possibility of further BOJ easing, Saito said.
The yen was at 123.72 per dollar at 1:39 p.m. in New York. The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 peers, was little changed at 1,191.89, bringing its gain since May 21 to 1.7 percent. Recent data from consumer prices to durable goods orders improved, suggesting the first-quarter U.S. economic slowdown was temporary.
"The market is currently racing ahead in pricing in a rate hike for September," said Koji Fukaya, chief executive officer and currency strategist at FPG Securities Co. in Tokyo. "Whether the dollar keeps gaining will depend on data, and if next week's jobs report is strong that could change the picture. In that sense, next week is crucial."
The yen has weakened 3.4 percent in May, poised for its worst slump since November. The Japanese currency tumbled 5.3 percent that month after the BOJ caught the markets off guard by expanding stimulus on Oct. 31.
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