Written by Makiko Yamazaki
RIO DE JANEIRO (Reuters) – Japanese Finance Minister Shunichi Suzuki and top currency diplomat Masato Kanda declined to comment on foreign exchange rates on Wednesday as the yen rose to its highest level against the dollar in more than two months.
Asked about the yen’s recent sharp rise, Suzuki said he would refrain from commenting, noting that it “could have unexpected effects on the market.”
Kanda, vice finance minister for international affairs, reiterated Suzuki’s comment about unexpected effects when asked whether speculative moves he had previously blamed on the weaker yen had abated.
The yen rose more than 1 percent on Wednesday to its highest since May as investors sold off short positions in the currency ahead of the Bank of Japan’s policy review next week when policymakers are expected to discuss raising interest rates.
Suzuki and Kanda spoke to reporters in Rio de Janeiro after a meeting of finance leaders from the Group of Seven nations, which was held on the sidelines of the G20 finance leaders’ meeting.
The silence contrasts with their repeated warnings to take action against excessive volatility earlier this month, when there were suspicions that Tokyo had spent nearly 6 trillion yen ($39.22 billion) intervening in the market to prop up the currency, which remained at a 38-year low of below 160 yen to the dollar.
Kanda said the foreign exchange issue was not on the G7 agenda on Wednesday.
“But we in the G7 discuss this issue routinely,” he added.
Japan will seek to reaffirm previously agreed commitments at the G20 meeting that exchange rates reflect underlying economic fundamentals, people familiar with the matter said.
Some politicians have called on the Bank of Japan to provide more clarity on its plan to raise interest rates, in part to prevent the yen from testing new lows against the dollar, adding to pressure on the central bank.
Although a weaker yen boosts exports, it has become a concern for policymakers by pushing up import costs and hurting consumption.
Kanda told reporters that the G7 meeting on Wednesday addressed issues of China’s excess industrial capacity, but declined to comment further.
He also said G7 finance leaders had made “significant progress” in talks on harnessing profits from frozen Russian sovereign assets to back a $50 billion loan to Ukraine, without elaborating.
(1 dollar = 152.9700 yen)