Market News

(Bloomberg) -- Japanese Finance Minister Satsuki Katayama issued a fresh warning on currency movements as the yen weakened toward the key threshold of 155 per dollar, inching closer to levels where authorities last intervened in markets.

“We’re seeing one-sided, rapid currency moves of late,” Katayama said in response to questions in parliament Wednesday, adding that it can’t be denied that the negative aspects of the weak yen are becoming clearer. “The government is watching for any excessive and disorderly moves with a high sense of urgency.”

The yen weakened as far as 154.79 to the dollar before paring its losses following Katayama’s remarks, and it was last trading around 154.64.

Katayama’s comments came as nervousness is building in the markets over the yen’s gradual move toward levels where interventions occurred in the past. While most see that as still some distance away, further weakness in the country’s currency could trigger additional speculation, putting more pressure on Katayama to at least intervene verbally more frequently, before taking actual action.

The last time Japan intervened in the foreign exchange markets was in July last year, when the yen was trading around 160 to the dollar.

The yen touched its weakest level against the dollar since February on Wednesday, weighed down in part by the Bank of Japan’s dovish messaging of late. Expectations that the US government will end a shutdown in the near term also provided fresh support for the greenback. With further dips in the yen, what Katayama says on the foreign exchange markets will likely receive closer attention over the coming days.

The weak yen has been contributing to continued inflation in Japan, with a key price gauge moving at or above the BOJ’s 2% target for three and a half years. Katayama said that the government will make sure to counter the impact from inflation with its upcoming economic package.

Japanese Prime Minister Sanae Takaichi aims to use her first stimulus package to jump start the economy and initiate a new growth strategy through investment in key industries. But she is also expected to address voter concerns through additional subsidies to lower winter utility bills and reduce gasoline taxes.

While the size of that package is still unknown, it’s broadly expected to be larger than last year’s, given Takaichi’s stance of seeking responsible but expansionary fiscal policy.

(Updates with additional background.)