Japan top FX diplomat says recent yen moves ‘one-sided’ in fresh warning

By Makiko Yamazaki and Rocky Swift

TOKYO (Reuters) -Japan’s top currency diplomat, Atsushi Mimura, said on Friday that recent currency moves are “somewhat one-sided and rapid,” in a fresh warning against speculative trading as the yen fell past the key 150 line against the dollar.

“We as Japanese authorities are closely watching foreign exchange moves, including speculative ones, with a high sense of urgency,” Mimura told reporters.

The dollar touched 150 yen for the first time since Aug. 1 after solid U.S. retail sales data reinforced expectations that the Federal Reserve will pursue modest interest rate cuts over the next year-and-a-half as the world’s largest economy remained resilient.

A weak yen could become a major source of concern for Japanese policymakers again ahead of the Oct. 27 general election, as it could dampen consumption by inflating the cost of importing fuel, food and raw material.

Separately, Deputy Chief Cabinet Secretary Kazuhiko Aoki reiterated in a regular news conference on Friday that it is important for currencies to move in a stable manner reflecting economic fundamentals.

He also repeated that the authorities were closely watching foreign exchange developments, including speculative moves.

The yen has been volatile in recent months, first driven higher by the Bank of Japan’s unexpected rate hike in late July and then pushed lower by receding concerns about the U.S. economy.

New Japanese Prime Minister Shigeru Ishiba also stunned markets and drove the yen down by saying the economy was not ready for further interest rate hikes, an apparent about-face from his previous support for the BOJ unwinding decades of extreme monetary stimulus.

Japanese authorities spent 5.53 trillion yen ($37 billion) intervening in the foreign exchange market in July to pull the yen off 38-year lows past 160 per dollar.

($1 = 149.9400 yen)