August 2, 2019 / 3:49 AM / a year ago

Japan finance minister warns against yen gains, seeks FX stability

TOKYO (Reuters) - Japan’s finance minister Taro Aso warned on Friday against recent yen gains and highlighted the importance of exchange rate stability, after a surge in the Japanese currency threatened to hurt the country’s export competitiveness.

FILE PHOTO: A woman counts Japanese 10,000 yen notes in Tokyo, in this February 28, 2013 picture illustration. REUTERS/Shohei Miyano/Illustration/File Photo

Japanese authorities tend to verbally intervene in markets to prevent investors from driving up the yen during times of increasing strains in overseas economies. The yen and the Swiss franc are perceived as safe-haven currencies and tend to be bought when markets grow jittery.

Aso told reporters after a cabinet meeting that he would not comment on currency levels, while noting that the yen had swung by 2 yen in the past week.

“I think it will have various impacts. At least, currency stability is extremely important. We need to pay close attention to the market,” he said.

The Japanese currency hit a more-than-one month high against the dollar JPY= on Friday after U.S. President Donald Trump broke a temporary truce in the Sino-U.S. trade war, sending shockwaves through global financial markets.

Trump said he would impose an additional 10% tariff on $300 billion worth of Chinese imports on Sept. 1 after U.S. negotiators returned from trade talks in Shanghai.

“This will surely affect China’s economy, which I think will have various impacts on the global economy,” Aso said.

“There’s already a move among companies to shift factories out of China. It’s developing into not just trade war but various other things, so it warrants careful attention.”

Japan has stayed out of the currency market since 2011 when it heavily intervened to stem the yen’s strength in the wake of the Fukushima nuclear disaster.

Japan has stuck to the G7/G20 agreement against competitive devaluation, with a pledge to promote market-oriented exchange rates and use monetary policy to achieve domestic objectives without targeting currencies.

Reporting by Tetsushi Kajimoto; Editing by Chris Gallagher and Jacqueline Wong

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