U.S. Markets

Japan Finance Minister Aso says won't intervene in FX market lightly

Japan's Finance Minister Taro Aso delivers his policy speech at the lower house of parliament in Tokyo, Japan, January 22, 2016. REUTERS/Toru Hanai

TOKYO (Reuters) - Finance Minister Taro Aso said on Tuesday Japan would respond to severe currency volatility in line with G7/G20 agreements, and would not intervene in the market lightly.

Aso was speaking to reporters when asked how he would respond to rapid market swings around Britain’s June 23 vote on whether to stay in or leave the European Union.

“We don’t intend to conduct currency intervention lightly,” Aso said. “We will respond in line with our agreement at the G7 and G20 that rapid fluctuations are undesirable and stability (is important).”

The minister did not elaborate, and declined to comment on whether Japan had contingency plans in case Britain did decide to leave the EU.

Japanese officials are worried about a spike in the yen, which is perceived as a safe-haven currency during times of heightened risk aversion, in the event of a Brexit.

Authorities have stayed out of the market since Japan last intervened in November 2011.

G7 leaders reaffirmed their opposition to competitive currency devaluation last month, warning it could cause excess volatility and disorderly movements in the foreign exchange market.

However, U.S. Treasury Secretary Jack Lew earlier this month shrugged off Japan’s concerns over the yen’s strength, describing recent market movements as “orderly”.

Reporting by Tetsushi Kajimoto; Editing by Chris Gallagher and Eric Meijer