Written by Makiko Yamazaki
RIO DE JANEIRO (Reuters) – Japan has urged its G20 counterparts to be more vigilant against excessive volatility in foreign exchange rates caused by speculation, Japan’s top currency diplomat Masato Kanda said on Thursday.
Kanda said at a press conference held during the meeting of G20 finance ministers and central bank governors in Rio de Janeiro that it is necessary to pay attention to the risks that may result from high interest rates for a long period in some countries, which may lead to destabilization of financial markets.
“Japan said we should be more vigilant against spillover effects (of such risks) and excessive currency fluctuations resulting from speculation,” said Kanda, vice finance minister for international affairs.
“We need to respond appropriately based on the G20 commitments that excessive currency volatility and disorderly movements have a negative impact on the economy and financial stability,” he added.
These comments come in the wake of sharp volatility in the Japanese yen recently.
The Japanese currency rose for a fourth straight session against the dollar on Thursday, recovering from a 38-year low hit earlier this month, as investors liquidated long-term bets against the currency ahead of a Bank of Japan meeting next week.
Analysts blamed the wide interest rate differentials between the United States and Japan for the weak yen.
The final draft of the G20 joint statement, seen by Reuters, confirms their commitment to the exchange rate in April 2021.
The G20 statement for 2021 said that the group’s countries “remain committed to ensuring that our exchange rates reflect underlying economic fundamentals.”
Kanda, who led massive waves of yen-buying intervention in 2022 and 2024, sees his term as vice finance minister for international affairs — a post that oversees Japan’s currency policy and coordinates economic policy with other countries — end next week.
He is set to be succeeded by Atsushi Mimura, a veteran of financial regulation.
