Japan Edges Closer To Prop Up The Yen

In a rare joint statement, Japan's government and central bank expressed concern about recent sharp falls in the yen, the strongest warning to date that Tokyo may intervene to support the currency as it plumbs 20-year lows, Tetsushi Kajimoto and Leika Kihara reported for Reuters.

Photo Insert: The statement reflects policymakers' growing concern about the damage that a sharp yen depreciation could inflict on Japan's fragile economy by harming business activity and consumers.

The statement reflects policymakers' growing concern about the damage that a sharp yen depreciation could inflict on Japan's fragile economy by harming business activity and consumers.

Many market participants, however, doubt that G7 member Japan will intervene soon to directly support the yen, a diplomatically risky and potentially costly course of action that occurred 20 years ago.

After a meeting with his Bank of Japan (BOJ) counterpart, top currency diplomat Masato Kanda told reporters that Tokyo will "respond flexibly with all options on the table." He declined to say whether Tokyo could negotiate with other countries to jointly step into the market.

"We have seen sharp yen declines and are concerned about recent currency market moves," the Ministry of Finance, BOJ, and the Financial Services Agency said in the joint statement released after their executives' meeting.

The G7, of which Japan is a member, has long held that markets should determine currency rates, but that the group will closely coordinate on currency movements, and that excessive and disorderly exchange-rate movements can harm growth.

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