Japan says communicating closely with U.S. on FX issues as yen hits

By Tetsushi Kajimoto

TOKYO (Reuters) -Japan and the United States agreed to closely communicate on currency issues, Japan’s top currency diplomat said on Tuesday in the wake of the yen’s decline to six-year lows against the dollar.

“We discussed financial market developments including dollar-yen moves,” vice finance minister for international affairs Masato Kanda told reporters after meeting with Andy Baukol, acting Under Secretary of International Affairs at the U.S. Department of the Treasury.

“We underscored the importance of maintaining previous G7 and G20 commitments on exchange rates,” Kanda said after the meeting that was held at Tokyo’s Ministry of Finance (MOF).

Kanda also said “excess volatility and disorderly currency moves” could hurt the economy and were undesirable, toning up Tokyo’s warning against sharp yen falls.

Kanda’s remarks underscore Japan’s growing concern over recent steep yen declines, which have drawn complaints by some lawmakers for inflating already rising import costs for energy and food.

Earlier on Tuesday, Finance Minister Shunichi Suzuki said the government will closely watch currency moves to prevent a “bad” weak yen that hurts the economy.

Both policymakers were speaking separately to reporters after the Japanese currency hit six-year lows beyond 125 yen versus the U.S. dollar on Monday, raising concern about the impact on the cost of living for the trade-reliant economy.

The yen weakening accelerated on Monday after the Bank of Japan moved to contain rising bond yields, even as most other major central banks including the U.S. Federal Reserve were tightening monetary policy.

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