Japan Officials Meet to Show Vigilance on Yen Near 9-Month High

(Bloomberg) -- Senior officials from Japan’s finance ministry, central bank and financial regulator met Thursday in a show of vigilance over a strong yen and as the government announced a state of emergency in Tokyo over the coronavirus.

“The stability of financial markets is extremely important,” the finance ministry’s top currency official, Kenji Okamura, told reporters after the meeting. “The government and Bank of Japan will work together as needed while carefully watching markets and the economy.”

The three-way meeting reflects increased nervousness among authorities after the yen strengthened to as high as 102.59 against the dollar Wednesday, a nine-month high, pushing Japanese exporters closer to loss-making levels when they are already facing lower demand amid the pandemic.

The 103 level is seen as a key level for maintaining profitability by non-manufacturers, according to a Cabinet Office report. The 100.20 level is seen by big exporters as the overall turning point between profits and losses, according to the report.

The yen was trading mostly unchanged at around 103.36 against the dollar at 5:35 p.m. local time following Okamura’s remarks, having already weakened since yesterday.

Thursday’s meeting represents an escalation in action by Japan’s authorities to try to keep currency gains at bay. A finance ministry official yesterday sent a calibrated signal to the market, saying stability is desirable in the foreign exchange market.

The yen is gaining at a particularly tough time for Japan. Prime Minister Yoshihide Suga Thursday declared a state of emergency for Tokyo and surrounding prefectures, after the capital posted a record 2,447 virus cases in a day.

While less stringent than the measures introduced last year, the announcement is likely to significantly hit the domestic economy.

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