TOKYO, July 31 (Reuters) – Japan will retain its basic
approach on the yen with intervention remaining an option to
tackle excessively volatile moves in the exchange rate, the
country’s new top currency diplomat Atsushi Mimura told Reuters.
“Japan will act under internationally agreed commitments
that exchange rates should be determined by markets, but that
excessive volatility or disorderly movements can have an adverse
impact on economic and financial stability,” Mimura said in an
interview on Tuesday.
“It has been internationally agreed that measures including
interventions are allowed when necessary,” he added.
Previously head of the ministry’s international bureau, the
57-year-old became vice finance minister for international
affairs on Wednesday – a post that oversees Japan’s currency
policy and coordinates economic policy with other countries.
Mimura’s appointment comes as the Japanese currency shows
tentative signs of recovery from 38-year lows, as investors
unwound their long-running bets against the currency ahead of a
Bank of Japan meeting this week.
While a weak yen gives exports a boost, it has become a
source of concern for policymakers by pushing up the cost of
imports and hurting consumption.
His predecessor, Masato Kanda led massive bouts of
yen-buying intervention in 2022 and 2024 during three years in
the position and was also known to aggressively warn markets
against pushing down the yen.
“A change in vice finance minister for international affairs
doesn’t mean a change in basic policy for not just foreign
exchange but various things as they are decided by the finance
ministry as an institution,” Mimura said.
He declined to comment on the current market situation,
saying that such comments could have an unforeseen impact on
markets.
Mimura, meanwhile, hinted at a potential change in the style
of communications with markets.
“Communicating with markets is extremely important,” he
said. “Being always vocal is one style of communication, but not
speaking may also be another way of communication. We must avoid
creating unnecessary market speculation or uncertainties, but
communication can be done both by speaking and not speaking.”
Mimura also said the Ministry of Finance will continue
cooperating with the Bank of Japan and the financial regulator,
the Financial Services Agency, as the three parties need to be
on the same page regarding macroeconomic policy.
Mimura said it is true that the yen’s effective exchange
rates have weakened due to decades of deflation, and the only
and natural solution is to improve Japan’s economic
competitiveness and boost the country’s growth potential.
“Areas of growth could not just be limited to traditional
manufacturing but also in inbound tourism, pop culture, soft
culture and others,” he said.
Having spent nearly a third of his 35-year government career
at Japan’s banking regulator, Mimura has the expertise and
international ties in the area of financial regulation.
During his three-year stint at the Bank for International
Settlements in Basel, Mimura helped set up the Financial
Stability Board in the midst of the 2008-2009 global financial
crisis to reform financial regulation and supervision.
(Reporting by Makiko Yamazaki and Takaya Yamaguchi; Editing by
Jacqueline Wong)
