Japan's former top currency diplomat Mitsuhiro Furusawa said the yen is 'clearly too weak' and that Tokyo and Washington could intervene again 'at any time' if the currency slides back toward levels seen before their joint intervention. Furusawa told Reuters that intervention alone only buys time, and that faster Bank of Japan rate hikes are needed to reverse the yen's downtrend, adding that most market players believe the BOJ will raise rates in September and that he thinks it should. He estimates the central bank would ultimately like to raise rates to 1.5% to 1.75%, after raising rates to a 31-year high of 1% in June. Last month, Japan's Ministry of Finance purchased yen in coordination with the U.S. Treasury to counter excessive volatility, and the yen fell past 163 to the dollar in July before the joint intervention lifted it back to around 155. Furusawa also said Prime Minister Sanae Takaichi's government shouldn't stand in the way of BOJ rate hikes, and Japan's debt-to-GDP ratio currently stands at 248.7%, the highest in the world.
Former currency diplomat urges faster BOJ rate hikes, implying higher yields.
