TOKYO (Reuters) - A top Japanese finance ministry official said on Friday he would closely monitor movements in currency markets after speculative trades were seen driving a surge in the yen during thin holiday trade this week.
Masatsugu Asakawa, Japan’s vice finance minister for international affairs, was speaking after the yen strengthened rapidly to a nine-month high versus the dollar on Thursday.
A rising yen is a problem for Japan because it reduces exporters’ earnings from overseas and increases deflationary pressure by lowering import costs. Further gains in the currency could test policymakers’ ability to ensure stable economic growth.
“We will monitor the situation for speculative moves in the foreign exchange market,” Asakawa told reporters.
“Volatility was high during Sydney trading.”
The jump in the safe-haven Japanese currency came after a shock revenue warning from Apple exacerbated concerns about a Chinese and global economic slowdown. [FRX/]
Japan is exposed to weakening global demand because its manufacturing sector is heavily focused on production for exports.
The trade war between China and the United States is also a worry because Japan ships a lot of machines and electronic parts to China that are used to make finished goods destined for other markets.
In an attempt to spur inflation, the Bank of Japan has maintained extremely accommodative monetary policy for almost six years but has achieved little success in pushing prices higher.
As part of its monetary policy, the central bank has heavily bought government debt, prompting concerns that the BOJ has could run out of options to respond to a serious economic downturn.
Reporting by Sumio Ito; Editing by Paul Tait and Sam Holmes
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