Japan explains yen’s ‘somewhat rapid’ declines to G7, says finance minister

Washington – Japan explained to its Group of Seven counterparts the yen’s recent “somewhat rapid” declines, finance minister Shunichi Suzuki said Wednesday, underscoring Tokyo’s growing alarm over the currency’s sharp fall to a two-decade low against the dollar.

Suzuki did not comment on how the G7 finance leaders responded, saying only that the meeting in Washington focused on discussions over the global economy and Russia’s invasion of Ukraine rather than exchange-rate moves.

In a statement issued after their meeting, the leaders said they were closely monitoring global financial markets, which have been “volatile,” but made no direct mention of exchange rates.

Suzuki said the G7 likely stuck to its agreement that markets ought to determine currency rates, that the group will closely coordinate on currency moves, and that excessive and disorderly exchange-rate moves would hurt growth.

“I believe the G7’s basic thinking on exchange rates remains intact,” Suzuki said during a news conference in Washington after the meeting with finance leaders of the Group of Seven advanced economies, held on the sidelines of the International Monetary Fund gatherings.

He added that rapid currency moves were undesirable, when asked about the yen’s recent sharp falls.

Suzuki also said he refrained from joining some other Group of 20 counterparts who walked out of talks held Wednesday in protest at Russia’s presence so that he could condemn Moscow at the meeting over its invasion of Ukraine.

Suzuki told reporters that he criticized Russia’s aggression in the strongest language, adding that most of the G20 members shared the view that the war in Ukraine was unforgivable.

The yen has plunged against the dollar, with the Bank of Japan continuing to defend its ultra-low rate policy in contrast with heightening chances of aggressive rate hikes by the U.S. Federal Reserve.

Investors believe the yen has even further to fall, with most betting that even a government intervention wouldn’t be enough to turn around the momentum.

BOJ Governor Haruhiko Kuroda, who also attended the meeting, said excessive exchange-rate volatility could affect business activity.

“It’s desirable for exchange rates to move stably, reflecting fundamentals,” Kuroda said. “The BOJ will carefully watch how currency moves could affect Japan’s economy and prices.”