Forex moves are too rapid, says Japan’s Mimura

Addressing recent currency movements, Japan's top currency diplomat Atsushi Mimura said on Wednesday that the pace of those moves, including over the past few days, is too rapid.

Mimura highlights rapid currency moves

Forex fluctuations are too rapid.

Recent moves are too rapid.

Yen shows little response

Following the comments from Japan's Mimura, the Japanese Yen (JPY) shows no significant reaction.

Japanese Yen: frequently asked questions

Economic performance, policy and sentiment drive the Japanese Yen

Among the world's most actively traded currencies, the Japanese Yen (JPY) derives its value broadly from Japan's economic performance. More specific influences include the Bank of Japan's policy, the gap between Japanese and US bond yields, and traders' appetite for risk, alongside other factors.

Bank of Japan decisions shape the Japanese Yen's value

Currency control falls within the Bank of Japan's mandates, making its actions an important influence on the Yen. Direct intervention in currency markets has occasionally been used by the BoJ, usually to weaken the currency. It avoids frequent intervention, however, because of political concerns among Japan's main trading partners. Between 2013 and 2024, the BoJ's ultra-loose monetary stance weakened the Yen against its principal currency peers as policy increasingly diverged from that of other major central banks. The subsequent gradual withdrawal of this ultra-loose policy has more recently offered the Yen some support.

Japanese and US bond yield differentials influence the Japanese Yen

By maintaining ultra-loose monetary policy over the past decade, the BoJ has moved further apart from other central banks, notably the US Federal Reserve. That policy divergence helped widen the yield gap between 10-year US and Japanese bonds, favouring the US Dollar over the Japanese Yen. The gap is now narrowing as a result of the BoJ's 2024 decision to withdraw gradually from ultra-loose policy and interest-rate reductions by other major central banks.

Market uncertainty can strengthen the Japanese Yen

During periods of market stress, investors are more inclined to move money into the Japanese Yen, which is widely regarded as a safe-haven investment because of its perceived reliability and stability. Such turbulence is therefore likely to lift the Yen against currencies considered riskier investments.

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