Written by Makiko Yamazaki and Takaya Yamaguchi
TOKYO (Reuters) – Japan will maintain its basic approach on the yen, with intervention remaining an option to address excessively volatile moves in the exchange rate, Atsushi Mimura, the new Japanese diplomat in charge of the currency, told Reuters.
“Japan will act in accordance with internationally agreed commitments that exchange rates should be determined by markets, but excessive volatility or disorderly movements could have a negative impact on economic and financial stability,” Mimura said in an interview on Tuesday.
“It has been internationally agreed that measures, including interventions, are permissible when necessary,” he added.
Shinzo Abe, 57, who previously headed the ministry’s international bureau, became vice finance minister for international affairs on Wednesday, a post that oversees Japan’s currency policy and coordinates economic policy with other countries.
Mimura’s appointment comes as the Japanese currency shows tentative signs of recovery from a 38-year low, with investors unwinding long-term bets against the currency ahead of a Bank of Japan meeting this week.
Although a weaker yen boosts exports, it has become a concern for policymakers by pushing up import costs and hurting consumption.
His predecessor, Masato Kanda, led massive yen-buying interventions in 2022 and 2024 during his three years in office, and was also known for his strong warning to markets against pushing the yen lower.
“Changing the vice finance minister for international affairs does not mean a change in the basic policy not only on foreign exchange but on various things as decided by the finance ministry as an institution,” Mimura said.
He declined to comment on the current market situation, saying such comments could have an unexpected impact on the markets.
Meanwhile, Mimura hinted at a possible change in the way it communicates with markets.
“Communicating with the markets is crucial,” he said. “Constantly expressing one’s opinion is one way of communicating, but not speaking can also be another way of communicating. We need to avoid creating unnecessary speculation or doubt in the market, but communication can be done through speaking and not speaking.”
Mimura added that the finance ministry will continue to cooperate with the Bank of Japan and the financial regulator, the Financial Services Agency, as the three parties need to be on the same page regarding macroeconomic policy.
Mimura said it is true that the yen’s effective exchange rate has weakened due to decades of deflation, and that the only natural solution is to improve Japan’s economic competitiveness and boost the country’s growth potential.
He added that “the growth areas cannot be limited to traditional manufacturing only, but also to inbound tourism, popular culture, soft culture and others.”
Having spent nearly a third of his 35-year government career at Japan’s banking regulator, Mimura has experience and international connections in financial regulation.
During his three-year tenure at the Bank for International Settlements in Basel, Mimura helped create the Financial Stability Board in the midst of the global financial crisis of 2008 and 2009 to reform financial regulation and supervision.
