Japan appointed a new top foreign exchange diplomat on Friday after the yen hit a 38-year low against the dollar, raising expectations of imminent market intervention by Tokyo to support the battered currency.
Atsushi Mimura, a veteran of financial regulation, replaces Masato Kanda, who carried out the largest ever yen buying operation this year.
The change is part of a regular staff reshuffle carried out every year and comes after officials stepped up their warnings about intervention.
Finance Minister Shunichi Suzuki said on Friday that authorities are “deeply concerned” about the impact of “rapid and one-sided” currency movements on the economy.
The yen fell below ¥161 per dollar on Friday, its lowest level since 1986.
At a regular news conference, Suzuki said authorities will respond appropriately to excessive currency movements and maintain confidence in the yen.
“The government is closely monitoring developments in the foreign exchange market with a great sense of urgency,” Suzuki said, adding that efforts to continue fiscal reform are crucial.
The yen fell to ¥161.15 per dollar on Friday morning. The decline was not halted by a drop in US interest rates overnight nor by data pointing to strong increases in consumer prices in Tokyo.
Japanese authorities are under renewed pressure to halt the yen’s sharp slide as traders focus on the interest rate differential between Japan and the United States.
Tokyo spent ¥9.8 trillion on foreign exchange intervention in late April and early May after the yen hit a 34-year low of ¥160.24 per dollar on April 29.
Mimura’s appointment as top foreign exchange diplomat takes effect on July 31, following the meeting of the Group of Twenty finance ministers and central bank governors in Rio de Janeiro on July 25.
However, little is known about his stance on currency policy.
The 57-year-old, currently head of the ministry’s international bureau, will become deputy finance minister for international affairs – a position that oversees Japan’s currency policy and coordinates economic policy with other countries.
Mimura has spent nearly a third of his 35-year government career at Japan’s banking regulator. He has expertise and international connections in the field of financial regulation.
During his three-year stint at the Bank for International Settlements in Basel, Switzerland, Mimura worked with Mario Draghi to set up the Financial Stability Board in the midst of the 2008-2009 global financial crisis to reform financial regulation and supervision.
At the Ministry of Finance, he worked last year on the revision of the Japan Bank for International Cooperation Act, which aimed to expand the scope of the state-owned bank and make foreign companies that play a significant role in Japan’s supply chain eligible for loans from the bank.
Mimura was also part of a government team that briefed foreign investors on the 2020 revisions to foreign ownership rules, aimed at debunking the idea that stricter rules were intended to discourage foreign investment in Japan.
Mimura succeeds Kanda, who during his three-year term actively pressured markets to counter the sharp decline in the yen, which he said was caused by speculators.
Kanda also oversaw the intervention in buying the yen in late April and early May.
A weaker yen is a boon for Japanese exporters but a headache for policymakers as it raises import costs, intensifies inflationary pressures and puts pressure on households.
