U.S. Inflation Heats Up, Pressuring the Yen; Japan's Finance Minister Again Warns Speculators: Will Not Hesitate to Intervene in FX If Necessary

Japanese Finance Minister Satsuki Katayama warned market speculators that Japan is ready to intervene in the foreign exchange market again if necessary. This came after the latest U.S. inflation data came in above expectations, pushing the yen to a low against the dollar this month. She also said that since Japan and the United States jointly stepped in to support the yen in July, the positions of Tokyo and Washington on exchange rate issues have not changed. Speaking to reporters in Bangkok on Thursday morning before attending a Group of 20 (G20) meeting, Katayama said: "Our position on foreign exchange is completely consistent with the signal conveyed when the two countries carried out joint intervention. The U.S. side is currently aligned with our position, and we will not hesitate to act if necessary." Katayama's remarks came against the backdrop of U.S. CPI data released on Wednesday showing the highest inflation level in five months, dragging the yen further weaker. That day, the yen fell to as low as 158.95 per dollar at one point, before paring losses as U.S. Treasury yields retreated. During this trip, Katayama will attend a series of international finance meetings. Finance ministers and central bank governors attending are expected to discuss multiple global issues, including rising global bond yields and financial risks brought by frontier artificial intelligence (AI). Speaking about the recent surge in global bond yields, Katayama pointed out that among major developed economies, Japan is one of the few countries able to convincingly argue for fiscal sustainability. She stressed that Prime Minister Sanae Takaichi and her cabinet have repeatedly made clear commitments to steadily reduce the debt-to-GDP ratio and keep government bond issuance within a reasonable range. "Not all countries can make such a clear commitment like we can," Katayama said. "We can openly explain our fiscal responsibility, and I hope to firmly convey this signal."