Japan doesn't rule out intervention on yen volatility

The news: Japan's government won't rule out any options in ensuring the stability of the yen, after an overnight price spike briefly dented the currency's 2023 downtrend against the greenback.

The numbers: The US dollar is buying 149.25 yen, coming into the range where Tokyo last intervened to buy the yen in September and October 2022 when it fell to a 32-year low of 151.94 per dollar. Last night around midnight AEDT the Yen reversed sharply from 150.15, but Japanese officials would not confirm if the government was behind the liquidity spike.

The context: While a weaker currency is good for exports, it inflates costs for households and governments through higher import and raw material costs. The yen has been on a downward trend against the greenback for most of 2023, but unlike most economies currently struggling against a soaring US dollar, Japan has a low-interest rate policy and a debt burden more than twice its GDP, according to Reuters.

What they said: "The government is watching market developments very carefully. We're ready to take necessary action against excess volatility, without ruling out any options," Japan finance minister Shunichi Suzuki told reporters on Wednesday.