Japan warns of potential action over rapid currency fluctuations

Currency markets: Japan's top currency official, Masato Kanda, has issued a cautionary statement regarding potential action in response to erratic fluctuations in foreign exchange rates. Kanda underlined importance of stability aligned with ecomic fundamentals in currency markets. He stated that while government intervention is t necessary when markets are functioning smoothly, it may be required in cases of excessive speculation-induced volatility. 

Recent suspicions suggest Japan may have intervened in market to boost yen's value after it plummeted to levels t seen in over three deces. Data from Bank of Japan indicates substantial spending, amounting to over 9 trillion yen, in defence of currency. Such interventions contributed to a table rebound in yen's value from its recent low against dollar.

Kanda refrained from confirming or denying speculation about market interventions, in line with customary practice among currency authorities. While a weaker yen benefits Japanese exporters, it presents challenges for policymakers, including increased import costs, inflationary pressures, and household budget constraints.

Furrmore, Kanda highlighted widespre concerns about foreign exchange market volatility expressed by several countries during a meeting preceding ASEAN+3 finance ministers and central bank goverrs conference in Tbilisi, Georgia. This collective apprehension underscores broer impact of currency fluctuations beyond Japan, reflecting shared interests of ASEAN members and East Asian partners in maintaining market stability.

(With Reuters inputs)