Japan and South Korea expressed concern on Saturday about rapid declines in their currencies, saying they were ready to act against excessive foreign-exchange volatility.
Japanese Minister of Finance Satsuki Katayama and South Korean Minister of Economy and Finance Koo Yun-cheol “expressed serious concern over the sharp depreciation of the Korean won and the Japanese yen,” they said in a statement after their annual meeting in Tokyo.
“Furthermore, they reaffirmed that they will closely monitor foreign exchange markets and continue to take appropriate actions against excessive volatility and disorderly movements in exchange rates,” the statement said.
Photo: Reuters
The US dollar has gained as rising crude prices, which closed above US$100 a barrel on Friday, and a steady stream of geopolitical headlines have rattled currencies across the world, ending a volatile week last week at its highest level this year.
The greenback is benefiting as traders curb expectations for how much the US Federal Reserve might cut borrowing costs this year in the face of rising inflation concerns. Traders are no longer fully pricing in a reduction this year, compared to prior to the war when they were expecting two cuts.
The US dollar’s advance has been amplified by weakness elsewhere, especially currencies in economies exposed to rising energy costs having come under heavy pressure as crude surged.
The yen touched its lowest in 20 months on Friday and is near the line of 160.00 yen to 1 US dollar that many in the market think might prompt Japan to intervene to support the currency. The won breached a psychological barrier of 1,500 won to 1 US dollar this month for the first time since 2009.
Tokyo and Seoul shared the view that significant volatility had emerged in financial markets, including foreign exchange, Katayama said at a news conference after the meeting.
“The Japanese government is fully prepared to respond at any time, bearing in mind the impact that currency moves may have on people’s livelihoods amid surging oil prices, and I believe both sides share that understanding,” she said.
Katayama regularly says Japan is ready to act regarding yen moves, although some policymakers privately say that intervening to prop up the yen could prove futile, as demand for the US dollar could only intensify if the war persists.
