Japanese Prime Minister Shinzo Abe on Monday (June 27) instructed Finance Minister Taro Aso and Deputy Bank of Japan Governor Hiroshi Nakaso take steps “if necessary’, in the wake of Britain’s historic vote to leave the European Union.
Abe summoned Aso and Nakaso to an emergency meeting at the Prime Minister’s office to discuss how to deal with the market turbulence caused by Brexit.
“I’d like to ask Minister (Taro) Aso to watch the currency markets ever more closely in cooperation with the Bank of Japan. I also want him to closely communicate with other G7 countries to take necessary steps for the economy and financial market,” Abe said signaling Tokyo’s readiness to conduct yen-selling intervention in the market if it deems yen rises as excessive.
The yen briefly soared above the key threshold of 100 to the dollar on Friday (June 24) as investors hoarded the safe-haven currency after the Brexit vote, adding to headaches for Japanese policymakers worried about the effect a strong yen could have on exports.
“To the Bank of Japan, I’d like to ask to closely cooperated with central banks of other G7 countries to secure the liquidity of the currency market. In addition, I want it to perform it’s function as a financial mediator by providing enough funds to Japanese firms operating in the United Kingdoms to prevent them from financial difficulties,” Abe said.
Nakaso said the BOJ remained in close contact with other central banks to ensure global financial markets had ample liquidity.
The deputy governor, who was speaking to reporters after the meeting, declined to comment on whether the BOJ would hold an emergency rate review to expand monetary stimulus.
(c) Copyright Thomson Reuters 2016
