Japan is ready to act on the strong fall of the dollar against the yen

U.S. inflation data was expected to be tougher, but it was better. In combination with a broad dollar selloff, it led to sharp fluctuations in the yen. This, as well, influenced the Japanese government, which warned about interventions on the currency market.

According to Finance Minister Suzuki Shunichi, the government is keeping a close eye on market events and is ready to intervene if necessary.

Expectations for stronger data on consumer prices in the United States did not materialize. This was followed by comments on lowered market expectations concerning an aggressive interest rate increase by the FRS. This resulted in the fall of the dollar against the Japanese currency by 4 yen overnight.

Tokyo is gradually cautioning to avoid excessive one-sided currency movements. At the same time, politicians should be satisfied with the yen's rise against the dollar after a sharp 20 percent drop this year.

The dollar fell dramatically overnight and lost a large share of its position compared to many of its competitors. The Japanese currency reached 140.9350 to the dollar at some point, which was the highest one-day rise since 2008.

A midyear report from the Treasury Department shows that most of the known interventions have been conducted to make currencies stronger, not weaker. According to the U.S. Treasury Department, no major trading partner manipulated its exchange rates to gain an unfair competitive advantage before June 2022.

Japan was on the U.S. Treasury Department's monitoring list. However, according to Suzuki, this does not give the right to debate Japan's monetary policy.

He said that Japan will coordinate with the currency authorities in other countries, including the United States.