TOKYO/SEOUL - Japan and South Korea on Saturday conveyed strong concern about recent steep falls in their currencies and signalled they stand ready to address excessive volatility in foreign-exchange markets.
Following their annual meeting in Tokyo, Finance Minister Satsuki Katayama of Japan and her South Korean counterpart Koo Yun-cheol said they "expressed serious concern over the recent sharp depreciation of the Korean won and the Japanese yen," in a joint statement.
The ministers pointed to a run-up in the dollar driven by safe-haven demand amid tensions from the U.S.-Israeli war on Iran, noting that such flows have hit currencies of countries that rely heavily on imported oil.
In the statement they said they would "closely monitor foreign exchange markets and continue to take appropriate actions against excessive volatility and disorderly movements in exchange rates."
Market moves in recent days underline their concern. The yen on Friday touched its lowest level in 20 months and is approaching the 160.00 per dollar threshold that many market participants view as a potential trigger for Japanese intervention to support the currency. Meanwhile, the South Korean won has fallen past the psychological barrier of 1,500 per dollar this month for the first time since March 2009.
Speaking at a press conference after the Tokyo meeting, Katayama said the two governments shared the view that financial markets, including foreign exchange, had experienced notable volatility. She added that "the Japanese government is fully prepared to respond at any time, bearing in mind the impact that currency moves may have on people’s livelihoods amid surging oil prices, and I believe both sides share that understanding."
Katayama has frequently reiterated Japan's readiness to act on yen movements. The joint statement and her remarks underscore an intent to remain vigilant, even as some policymakers, speaking privately, caution that intervention to prop up the yen could prove ineffective if dollar demand continues to grow while the conflict persists.
The ministers did not outline specific intervention steps in their public remarks. Their statement focused on monitoring and a willingness to take appropriate measures should volatility become excessive or movements disorderly.