Japan warns it will take 'appropriate' action against excessive foreign exchange moves

Japanese authorities said on Monday that they would take "appropriate" action against excessive exchange-rate moves, in comments that raise the prospect of intervention after last week's central bank meeting that caused renewed yen declines.

"The recent foreign exchange moves were one-sided and sharp, and I'm concerned about them," Atsushi Mimura, Japan's top currency diplomat, told reporters. "We'll take appropriate actions against excessive moves."

Chief Cabinet Secretary Minoru Kihara also warned about the yen's continued weakness and said it was important that "the currencies should move in a stable manner, reflecting the fundamentals."

"The government will take appropriate measures against excessive movements, including speculative ones," he told a press conference.

These remarks followed those by Finance Minister Satsuki Katayama late on Friday that Tokyo would respond appropriately to excessive, speculative moves in the yen, underscoring the government's concern over sharp yen falls that push up import prices and household living costs.

The Bank of Japan (BOJ) raised interest rates to 0.75% from 0.5% on Friday, taking borrowing costs to levels unseen in three decades and narrowing the rate differential with the U.S. Federal Reserve.

But the dollar rose as high as 157.67 against the Japanese yen on Friday, its strongest level in four weeks, as markets focused more on Governor Kazuo Ueda's comments at his news conference that offered few clues on the pace and timing of the BOJ's next rate hike.

Kihara also noted that the government would "closely monitor the impact of higher interest rates while cooperating with the Bank of Japan."

Japanese government bonds (JGBs) weakened further on Monday, following the central bank's interest rate hike last week.

The two-year JGB yield, which is most sensitive to central bank policy, rose to a record high, while the 10-year yield hit a 26-year high.