Kanda: We are in close contact with the US regarding movements in exchange rates

Currency traders preparing for policy decisions by the Federal Reserve and the Bank of Japan this week have received fresh reminders that Japanese authorities are prepared to intervene in the currency market, with possible U.S. support, if the yen’s swings are deemed excessive. Masato Kanda, Japan’s chief currency officer, said on Wednesday that he was in close contact with his U.S. counterparts and that both sides agreed that excessive currency movements were unacceptable. U.S. Treasury Secretary Janet Yellen had previously said that any Japanese intervention to support the yen would be understandable if it was aimed at smoothing out volatility. The yen weakened overnight, near its lowest level since November, as the dollar approached 147.92 yen. Kanda said he would not rule out any action in the markets if necessary and that he was continuing to monitor developments with an extreme sense of urgency. The yen strengthened only slightly after Kanda’s comments before giving up gains. Kanda was speaking ahead of a decision by the Fed later on Wednesday, where officials are expected to keep interest rates on hold. The widening interest rate differential between Japan and the U.S. has been a major factor in the yen's weakness, making the higher-yielding dollar more attractive.