Japan finance minister warns of action against any excessive forex moves

Japanese Finance Minister Satsuki Katayama said on Friday that Tokyo would take appropriate action to deal with any excessive currency volatility after the yen plunged despite the central bank's decision to raise interest rates.

"We are alarmed as we are clearly seeing one-sided, sharp moves over the past half-day or the past few hours," Katayama told reporters after attending an online meeting with her Group of Seven counterparts.

"We will respond appropriately to excessive moves, including those driven by speculators, based on the U.S.-Japan joint statement signed in September," she said. The bilateral agreement said interventions should be reserved for combating excess volatility.

Just before 1500 GMT, the dollar was up almost 1.2% on the day at around 157.38 yen, set for its largest one-day rise since early October, after the Bank of Japan raised rates but did not offer much of a view on future moves.

The dollar had briefly dipped below 157 yen after Katayama's warning.

Some market players were betting that Japan's 'line in the sand' would be 160 yen, as it last stepped into the currency market in July 2024, when the yen weakened beyond 160 per dollar to 38-year lows.

Asked about the BOJ's rate hike decision, Katayama said it had been based on wage and price trends, with the aim of achieving the 2% inflation target in a sustainable and stable manner.

"I value it as such," she said, adding that she expected the BOJ to continue working closely with the government and to conduct appropriate monetary policy to achieve the target as wages increased.