TOKYO – Japanese Finance Minister Shunichi Suzuki said on Friday that the authorities should be vigilant to any downside risks stemming from the US Federal Reserve’s monetary policy tightening, which has pressured the yen to historic lows.

The yen has tumbled on the widening gap between US and Japanese interest rates, with the Fed’s aggressive interest rate hikes contrasting sharply with the Bank of Japan’s (BOJ) massive monetary stimulus.

“We need to continue to monitor how US inflation and any changes in its monetary policy could affect the Japanese and global economies,” Mr Suzuki told reporters.

The minister echoed BOJ governor Haruhiko Kuroda’s recent caution about any spill-over effects from aggressive monetary policy tightening by the United States on Japan and other countries.

The Fed raised interest rates by three-quarters of a percentage point this week, signalling that it may be near a turning point in its monetary policy tightening.

However, Fed chair Jerome Powell has dashed expectations for any pivot.

The Japanese yen rose by a marginal 0.07 per cent to 148.155 per dollar in early trade on Friday, hovering below its 32-year low near 152 yen.

Turning to currency intervention, Mr Suzuki said Japan was not targeting any specific levels when intervening in the currency market to prop up the yen.

Japan spent a record US$43 billion (S$61 billion) supporting the yen last month after it slumped to a 32-year low. In September, it conducted its first yen-buying intervention since 1998.

“Basically, the exchange rates need to move stably, reflecting fundamentals,” Mr Suzuki said.

“We cannot tolerate excessive fluctuations driven in particular by speculative trading, which could badly affect households and businesses,” he said. “We will stick to our stance of taking necessary action if such moves emerge.” REUTERS