Rapid drop in yen raises concerns

Japan’s finance minister warned on Friday about the yen’s weakening, describing it as “too rapid”, but he stuck to the government’s stance of allowing markets to determine exchange rates and dismissed the need to intervene to halt the slide.

Speaking to reporters after a cabinet meeting, Taro Aso said rapid currency moves, whether up or down, were undesirable.

Aso’s remarks prompted a spike in the yen versus the dollar.

The dollar fell to as low as 117.45 yen from around 118 yen, after hitting a seven-year peak of 118.96 versus the yen earlier this week.

“The yen’s depreciation against the dollar over the past week has been too rapid … A rapid swing in currencies, whether up or down, should not be welcome as it causes various impacts,” Aso said.

Aso dismissed the need to intervene in the market.

“Currencies should be determined by the market, not by intervention,” he said.

Aso expressed concern that the yen’s excess depreciation would boost import costs of energy and other materials, when asked how the impact of a weak yen may become an issue in the upcoming general election expected on December 14.

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