Mimura Warns Markets: Take Yen Warning Seriously

Japan's top currency diplomat Atsushi Mimura urged markets to take seriously the 'very clear' warning on the yen issued by Tokyo and Washington last week. The message was delivered after US President Donald Trump raised concerns about yen weakness during a summit with Japanese Prime Minister Sanae Takaichi.

Mimura emphasized that Japan remains vigilant against excessive falls in the currency, which has become a source of concern for policymakers due to its inflationary impact on imports, including fuel. The Bank of Japan recently raised interest rates to 1.25 per cent, but the move failed to prop up the yen as the US Federal Reserve's rate hike and hawkish communication led to market views that the US-Japan rate gap will not narrow quickly.

Mimura also highlighted the strong relationship between Japan and the US, describing it as a 'currency alliance' that extends beyond exchange rates to encompass co-operation on economic security, critical minerals, and global supply chains. He brushed aside concerns about funding constraints limiting Japan's ability to intervene in the market again, stating 'I have absolutely no such concern.'