Former vice minister of finance Furusawa Mitsuhiro (古沢満宏) suggested that Japan and the US could once again undertake coordinated intervention to correct the yen's historic weakness. He said accelerating the BOJ's pace of rate hikes could also be an option, and discussed the future direction of exchange-rate measures and monetary policy.
Furusawa Mitsuhiro (古沢満宏), former vice minister of finance and chairman of the Institute for International Finance at Sumitomo Mitsui Banking Corporation, said in an interview with Reuters that Japan and the US could once again undertake coordinated intervention to correct yen weakness. He also indicated that accelerating the BOJ's pace of rate hikes could be an option.
Furusawa Mitsuhiro (古沢満宏) said Japan wanted to correct the excessive depreciation of the yen through the coordinated intervention by Japan and the US at the end of July, while the US was wary of the impact of higher interest rates in the US and on US Treasury securities. He also pointed to concerns that rising interest rates ahead of the midterm elections could cause market turmoil.
On future exchange-rate measures, Furusawa Mitsuhiro (古沢満宏) said intervention could be undertaken at any time without fixating on specific levels, such as ¥160 or ¥162 to the dollar, and that a coordinated intervention remained a strong possibility.
Expectations of an early rate hike have risen in tandem with the coordinated intervention by Japan and the US, and the probability of a BOJ rate hike in September is said to be 77%. Furusawa Mitsuhiro (古沢満宏) said the BOJ "should" raise rates in September, adding that how it handles the neutral interest rate and the message it sends about the pace of future hikes will be important. While saying that yen weakness has a strongly negative impact, he emphasized the effects of higher raw-material costs and prices.