May 9, 2016 / 3:31 AM / a year ago

Japan ready to intervene if yen moves too volatile: finance minister

Japan's Finance Minister Taro Aso attends a news conference at the Finance Ministry in Tokyo December 24, 2015. REUTERS/Issei Kato

TOKYO (Reuters) - Japanese Finance Minister Taro Aso said on Monday that Tokyo is ready to intervene in the currency market if yen moves are volatile enough to hurt the country’s trade and economy.

Aso also said he did not think the United States considered Japan’s currency policy to be inappropriate, but acknowledged the two countries differed in their views on what would be deemed excessive yen rises that justify intervention.

“For Japan, excessive volatility in yen moves that affect Japan’s trade, economic and fiscal policies - be it yen rises or yen falls - is undesirable. If such moves occur, Japan is ready to intervene in the market,” Aso told parliament.

Sadayuki Sakakibara, head of Japan’s biggest business lobby Keidanren, said it was “natural” for Japanese authorities to act against recent yen rises that were speculative and out of line with economic fundamentals, according to Kyodo news agency.

“The business sector would offer its support” if Japanese authorities were to intervene in the currency market, Sakakibara was quoted as saying at a news conference on Monday.

The dollar hit an 18-month low of 105.55 yen last week after the United States added Japan to a list of countries it was monitoring over foreign exchange policies.

Some investors interpreted the move as a warning to Tokyo against conducting yen-selling market intervention. The dollar regained some ground to hover above 107 yen in Asia on Monday.

Japanese policymakers sought to gain informal consent to act against an unwelcome yen rise during a G20 finance leaders’ gathering in Washington late last month.

But the United States offered a cool response with Treasury Secretary Jack Lew describing yen moves as “orderly” a day after Aso conveyed to him Toyko’s strong concern over what it saw as “one-sided” yen rises.

Aso said Japanese and U.S. policymakers had frequent phone conversations on exchange rates, particularly when the Japanese currency gained 5 yen in two days last month.

“If the yen was gaining 5 yen in two days, it might gain 10 yen in four days. That would be too excessive and if such trend continued, it would be the kind of excessive currency volatility that G20 nations agreed was undesirable,” Aso said.

“The U.S. side, on the other hand, argued that it was still a 5-yen rise” and so did not meet the threshold for currency action, Aso said.

Japanese authorities have stayed away from the markets since they last intervened in 2011. At the time, Tokyo got G7 consent to intervene to stem a yen spike driven by speculation that a devastating earthquake would force Japanese insurers to repatriate overseas funds to pay for damage claims.

Reporting by Leika Kihara; Editing by Chris Gallagher & Kim Coghill

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