Japanese Government Says Paying 'Intense Attention' to Sharp Fall in Yen

TOKYO (Pakistan Point News / Sputnik - 02nd September, 2022) The Japanese government is monitoring the sharp fall in the Yen "with intense attention," given the importance of maintaining the foreign exchange market at a stable level, Japanese Chief Cabinet Secretary Hirokazu Matsuno said on Friday.

"It is important to keep the foreign exchange market at a stable level in accordance with fundamental conditions, sharp fluctuations are undesirable. Fluctuations have been recently increasing in the foreign exchange market. The government is monitoring the market with intense attention," Matsuno said at a press conference in Tokyo.

On Friday morning, Japan's yen dropped to 140.12 per US Dollar � the level of August 1998. The fall is mainly explained by significant differences in approaches of the US and Japanese central banks to monetary policy.

In particular, the US Federal Reserve � the country's central banking system � continues to increase the discount rate, as a hike is positive for the dollar.

In September, it is expected to increase by another 0.75 percentage points. In addition, the yield of US government bonds is also growing.

Japan, on the contrary, adheres to an ultra-soft monetary policy and keeps the discount rate at a negative level. In July, it stood at minus 0.1%.

Moreover, the US dollar continues to strengthen amid more favorable macroeconomic statistics in the country. According to the US Institute for Supply Management, in August, the purchasing managers' index in the US manufacturing industry stood at July's level of 52.8%, while analysts polled by the DailyFX portal had expected the figure to drop to 52%. The indicator remains at the lowest level since June 2020 for the second month in a row. Meanwhile, the employment index in the country's industry grew to 54.2% in August from 49.9% in July.