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Japan finance minister distances herself from past forex comments

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  Published in Business and Finance on Thursday, October 30th 2025 at 11:52 GMT by Channel NewsAsia Singapore
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Background: A volatile yen and the shadow of intervention

Since the end of 2021, the yen has slid to historic lows against the U.S. dollar, prompting fears that a sudden reversal could wreak havoc on Japan’s export‑driven economy. In February 2023, a series of statements by the finance ministry—phrased in terms of “monitoring” the market and “preventing extreme volatility” —were interpreted by analysts as a hint that Tokyo might take more active steps, including coordinated intervention with the Bank of Japan (BOJ). Such speculation has already influenced bond yields, equity valuations, and foreign investors’ appetite for Japanese assets.

The minister’s earlier comments

The finance minister’s earlier remarks were delivered during a mid‑March briefing with the press. She said that the government would keep a close eye on the FX market and that intervention would be considered “if the yen’s movements became excessively disruptive to the domestic economy.” The comments, although not explicit about a concrete plan, were enough to cause a short‑term uptick in the yen and a dip in the Japanese corporate bond market.

“We want to ensure that the yen does not fluctuate wildly beyond what fundamentals would justify,” she said, according to a transcript provided by the Ministry of Finance (MoF). The statement was subsequently echoed in a tweet from the MoF’s official account, adding “We are committed to maintaining market stability.” The tweet linked to a BoJ press release that reaffirmed the central bank’s stance of non‑intervention unless a significant distortion arose.

Rebuttal and distancing

Just weeks after the initial comments, the finance minister issued a statement in which she clarified that her earlier remarks were not an indication of a planned intervention but a reassurance that the government would monitor the market. “The government’s position remains unchanged: we are vigilant about the yen’s movements, but we do not have a predetermined plan to intervene,” she wrote in a statement posted on the MoF’s website. The post was linked to a brief commentary from the BoJ, which reiterated that it would intervene only if the market deviated from fundamentals.

In a subsequent press briefing held at the Finance Ministry’s headquarters, the minister added that “the comments made earlier were meant to calm market nerves, not to signal an imminent intervention.” She further explained that the wording of “monitoring” was chosen deliberately to avoid misinterpretation by global investors.

Implications for policy and markets

The ministry’s effort to clarify its position underscores the delicate balance Japan must strike between maintaining fiscal discipline and ensuring market confidence. According to a linked analysis from the Tokyo Institute of Policy Research, a sudden intervention could lead to a sharp appreciation of the yen, harming exporters and exacerbating Japan’s current‑account deficit. Conversely, a failure to act when necessary could erode investor trust and widen the currency gap further.

Financial markets have responded with a mix of caution and optimism. Bloomberg reports that the Japanese 10‑year Treasury yield rose by 4 basis points after the minister’s initial comments, only to fall back toward the 0.1% level after her clarification. The Nikkei 225 index showed a marginal uptick as traders took the cue that the government was not planning a large‑scale market move.

Broader context and political backdrop

The finance minister’s remarks have also drawn attention to the political climate surrounding Japan’s monetary policy. The ruling Liberal Democratic Party (LDP) has faced criticism from opposition lawmakers for perceived inconsistencies in its FX strategy. A link in the article takes readers to a parliamentary debate where an LDP deputy voiced concern that the minister’s statements were too ambiguous, potentially leading to unintended market reactions.

Meanwhile, the BoJ’s Governor, Kazuo Ueda, has consistently emphasized that the central bank will not intervene in the FX market unless fundamentals dictate otherwise. A recent BoJ briefing linked in the article highlighted Ueda’s caution against “excessive market speculation” that could undermine the bank’s policy framework.

Looking forward

As the yen continues to wrestle with supply‑demand imbalances and global macroeconomic pressures, Japan’s financial leadership will need to tread carefully. The finance minister’s recent clarification may provide a temporary sense of stability, but it also signals the need for clearer, more consistent communication to prevent future misinterpretations.

Analysts suggest that a definitive policy statement—either a firm commitment to non‑intervention or a formal outline of the conditions that would trigger action—would help anchor expectations. For now, the Ministry of Finance remains on a tightrope, balancing the imperatives of fiscal prudence, market stability, and political accountability in a rapidly changing global economic environment.