Japan’s top currency diplomat Atsushi Mimura signaled his resolve to act against excessive falls in the yen, urging markets to heed a ‘very clear’ warning delivered by Tokyo and Washington last week.

Mimura made the comments during an interview with CNBC on Monday, as the yen continues its downward trend. The Japanese currency has been under pressure due to the country’s trade tensions with China and South Korea, as well as the impact of the coronavirus pandemic.

The yen has fallen by over 10% against the US dollar since the start of 2020, and its decline is seen as a sign of Japan’s struggling economy. Mimura, who is also the deputy governor of the Bank of Japan, said that Tokyo and Washington were sending a clear message to markets about the risks associated with the yen.

‘We are saying this very clearly: if you don’t believe in the market, do not participate in it,’ Mimura said. ‘If you have doubts, then please refrain from buying or selling.’

Mimura’s comments come as investors are increasingly looking for safe-haven assets due to the rising uncertainty in global markets. The yen is often seen as a safe-haven currency during times of economic uncertainty.

However, Mimura warned that excessive falls in the yen could have serious consequences for Japan’s economy. ‘If the yen falls too much, it will hurt our exports and increase imports,’ he said. ‘This will have a ripple effect on the entire economy.’

Mimura’s comments are seen as a clear indication that Tokyo is taking steps to intervene in the currency market to prevent excessive falls. The Bank of Japan has already taken measures to inject liquidity into the market, but more action may be needed to stabilize the yen.

Market analysts say that Mimura’s comments are a strong signal that Tokyo is preparing to take action to support the yen. ‘Mimura’s message is clear: if you don’t believe in the yen, then you should be cautious,’ said Naoki Amano, senior currency analyst at Mitsubishi UFJ Securities.

Despite Mimura’s warnings, the yen continues to fall against the US dollar. The current exchange rate stands at around 104 yen per dollar, down from over 108 yen per dollar just last week.

Mimura’s comments are also seen as a sign of Japan’s resolve to address its trade tensions with China and South Korea. The country has been seeking to strengthen its economic ties with these countries, but the ongoing tensions have had a negative impact on the yen.

In addition to its economic implications, Mimura’s comments also raise questions about the role of central banks in supporting currencies. ‘The Bank of Japan’s actions will be closely watched by markets,’ said Amano. ‘If they take action to support the yen, it could have significant implications for other currencies as well.’

The yen is likely to remain under pressure in the coming weeks, but Mimura’s comments suggest that Tokyo is preparing to take action to stabilize the currency.

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