Japan warns of action if "one-sided" currency moves continue

TOKYO, Sept. 7 (Xinhua) -- The Japanese government said Wednesday it stood poised to intervene in the currency markets if the yen continues its rapid depreciation owing to "one-sided" currency moves.

The Japanese yen hit a fresh 24-year low against the U.S. dollar on Monday leading to Japan's Finance Minister Shunichi Suzuki calling for stability in currency markets, saying yen moves should be stable and reflect economic fundamentals.

"Recent moves are rather rapid and one-sided. We need to be watching developments with strong interest," Suzuki told a press briefing.

Japan's top government spokesman Chief Cabinet Secretary Hirokazu Matsuno, meanwhile, expressed "concern" about the yen's fall.

He told a regular press briefing that Japan is ready to take action if recent trends continue, without explaining further.

"We are concerned about recent rapid, one-sided moves. If such moves continue, we will take necessary action," Matsuno said.

The dollar was trading in the upper 143 yen range on Wednesday morning, levels not seen since 1998, dealers here said.

The U.S. Federal Reserve's aggressive interest rate hikes to combat inflation and the likelihood the policy will continue into next year have led to the yen being dumped for the U.S. dollar.

Conversely, the Bank of Japan (BOJ) has stayed committed to its ultra-loose monetary policy, setting its short-term benchmark interest rates at minus 0.1 percent, while continuing to guide 10-year Japanese government bond yields to around zero percent.

The BOJ's dovish policy stance has seen the gap in interest rates between Japan and the U.S. widen, which has triggered U.S. dollar buying and the yen's weakness, and is causing volatility in the stock market here.

A weak yen, on the one hand, is a boon for Japan's export-led economy, as profits from exporters made overseas get a boost when repatriated and price competitiveness is enhanced in foreign markets when the yen is weaker than its major counterparts.

On the other hand, however, a protracted weak yen further inflates already rising price for energy and raw material products, essential for resource-poor Japan to continually import, which ultimately will further hurt Japan's already negative trade balance and broader economy.