Japan appointed Atsushi Mimura as its new top foreign exchange diplomat on Friday as the yen hit a 38-year low against the dollar. This move has raised expectations of possible market intervention by Tokyo to stabilize the weakening currency. Mimura, a veteran in financial regulation, replaces Masato Kanda, who had led the largest yen-buying intervention on record this year. Although the change is part of an annual personnel reshuffle, it comes at a critical time as markets test Japan’s resolve to address the yen’s decline, which has increased import costs and pressured households and companies.
Hideo Kumano, chief economist at Dai-ichi Life Research Institute, noted that Kanda was perceived as aggressive, given his readiness to intervene in the currency market. He added that while Mimura’s approach remains to be seen, the overall policy direction is unlikely to change significantly.
Japanese officials reiterated their concerns as the yen fell past 161 per dollar on Friday, a level below what previously triggered intervention. Finance Minister Shunichi Suzuki emphasized that excessive volatility in the currency market is undesirable and that authorities would respond appropriately. He expressed deep concern about the economic impact of the yen’s rapid and one-sided movements.
The yen’s depreciation is partly driven by the interest rate divergence between Japan and the United States. While a weaker yen benefits Japanese exporters, it poses challenges for policymakers by raising import costs, increasing inflationary pressures, and straining households. Under Kanda, Tokyo spent 9.8 trillion yen ($60.85 billion) on foreign exchange market interventions earlier this year, when the yen hit a 34-year low.
As the yen reached 161.27 per dollar on Friday, market players speculated that authorities might intervene before the currency breaches the 164.50 threshold. Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley Securities, suggested that intervention could occur before the yen hits this level.
Mimura’s appointment takes effect on July 31, following the Group of 20 finance ministers and central bank governors meeting in Rio de Janeiro from July 25. Currently head of the finance ministry’s international bureau, the 57-year-old Mimura will become vice finance minister for international affairs, overseeing Japan’s currency policy and coordinating economic policy with other countries.
With extensive experience in financial regulation, Mimura played a key role in setting up the Financial Stability Board during the 2008-2009 global financial crisis. He has also worked on revising laws to expand the scope of the Japan Bank for International Cooperation and briefing foreign investors on Japan’s foreign ownership rules.
As Mimura steps into his new role, his approach to managing Japan’s currency policy will be closely watched, especially as the country navigates the challenges posed by a weakening yen and the global economic landscape.
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