The yen fell close to the 149 level against the U.S. dollar on Friday, hitting a 32-year low on expectations of a widening interest rate differential between Japan and the United States as the Federal Reserve is likely to continue raising interest rates to fight inflation.
With the yen briefly sinking to 148.86 against the dollar in New York, Japan's top financial diplomat issued a verbal warning over the yen's rapid slide, saying Tokyo is "always ready to take decisive actions" if excessively volatile movements in the currency market are repeated.
Masato Kanda, vice minister of finance for international affairs, said he believes many people regard recent foreign exchange movements as volatile, and countries are becoming increasingly vigilant about excessive volatility and disorderly movements in the currency market.
"The possibility is growing that we may have to take necessary measures, but I cannot say what specifically we would do," Kanda told reporters on the sidelines of annual meetings in Washington of the World Bank and the International Monetary Fund.
Last month, Japanese authorities conducted their first yen-buying, dollar-selling intervention since 1998.
The Finance Ministry conducts currency market interventions with the Bank of Japan acting as its agent.
The yen's weakness also reflects the BOJ's commitment to maintaining its ultraloose monetary policy, under which short-term interest rates are set at minus 0.1 percent and 10-year Japanese government bond yields are guided to around zero percent in an effort to shore up the economy.
At 5 p.m. in New York, the yen was trading at 148.73-83 to the dollar after hovering in the upper half of the range, compared with 147.47-49 at 5 p.m. Friday in Tokyo and 147.17-27 late Thursday in New York.
BOJ Governor Haruhiko Kuroda told reporters Thursday in Washington that he had defended the central bank's monetary easing to prop up the country's economy during a meeting of the finance chiefs from the Group of 20 major economies in the U.S. capital.
The remarks highlighted the differences over monetary policy between the Japanese and U.S. central banks.
Many analysts believe the Fed is likely to raise interest rates by 0.75 percentage point again at its next policy meeting in November, having done so at its three previous meetings.
The dollar's strength against other major currencies, including the euro and the British pound, is also adding to pressure on the Japanese currency, dealers said.
Japanese authorities intervened in the foreign exchange market by buying the yen on Sept. 22, after the yen plunged to near the 146 line.
Related coverage:
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G-20 finance chiefs agree to avoid monetary tightening "spillovers"
Dollar briefly rises to upper 147 yen zone, 32-year high
