Japan Commits to Managing Debt Levels Amid Continued Yen Weakness

The Japanese government has pledged to ensure the appropriate issuance and sale of debt instruments amid growing market concerns over the country’s fiscal health as the yen continues to weaken. Japanese Finance Minister Satsuki Katayama on Friday reaffirmed her commitment to taking necessary measures to address the depreciation of the yen against the US dollar. The yen’s exchange rate briefly plunged past the 162 level and approached 163 per dollar earlier this week, its lowest position in approximately 39.5 years. The Japanese currency subsequently strengthened to the 161 range after US employment data released overnight came in below expectations. In Friday morning trade in Tokyo, the yen moved in the lower 161 range against the dollar. Japan and the United States have a bilateral agreement regarding currency market intervention to address volatility and excessive depreciation or appreciation of their respective currencies. “We are always in close communication with the United States at all times,” Katayama told reporters, referring to the agreement. In the bond market, the yield on 10-year Japanese government bonds briefly touched 2.81 percent on Friday, the highest level in about 29 years. The surge was partly triggered by prolonged market concerns over Japan’s deteriorating fiscal health, which is currently the worst among developed nations. Katayama stated that the government will strive to manage the balance between the amount of government bond issuance and the total budget to maintain market confidence and public finance sustainability, while continuing to implement “responsible and proactive” fiscal policies.