Japan's Katayama: Alarmed over currency moves, will take appropriate action

Japan's Governor Katayama has expressed strong concerns over the recent currency moves, stating that it is essential for FX to move in a stable manner that reflects fundamental values. He has indicated that appropriate actions will be taken to counteract the rapid and one-sided movements in the market. Despite the Bank of Japan's decision to hike short-term interest rates to 0.75%—the highest in three decades—the yen has sold off significantly since the announcement, catching many off guard. The USD/JPY is now challenging the November highs, coming close to the January peak. Furthermore, the EUR/JPY has reached a record high of 184.35, while the GBP/JPY is at its highest level since 2008. The concerning situation around Japanese government bonds is also noteworthy, with 30-year borrowing rates hitting 3.42%, the highest since at least 2000, raising significant concerns regarding Japan's debt levels. Overall, these developments signal potential instability for the yen as market reactions to these rate hikes appear limited and may require vigilant responses from Japanese authorities.