The Japanese yen fell to a 32-year low against the US dollar after official data showed that prices in America rose faster than expected.
The yen fell to 147.66 per dollar before recovering some ground.
Shunichi Suzuki, Japan’s Finance Minister, stated that the government will take “appropriate action” in response to the currency’s volatility.
Last month, Japan spent nearly $20 billion to shore up the country’s faltering currency.
“We cannot tolerate excessive volatility in the currency market driven by speculative moves. We’re watching currency moves with a strong sense of urgency,” Mr Suzuki told reporters after attending a G7 finance meeting in Washington, DC.
Japan intervened in the global currency market last month to support the weakening yen.
This came after the yen fell to a new 24-year low against the dollar, marking the first time Japanese authorities intervened in the currency market since 1998.
However, analysts have warned that such interventions will have little impact as long as Japan’s interest rates remain significantly lower than those in the United States.
The Japanese yen has been under pressure in recent months, owing to the Bank of Japan’s (BOJ) very different approach from that of the US Federal Reserve.
Official figures released on Thursday showed that consumer prices in the United States rose more than expected last month, indicating that the world’s largest economy’s inflationary battle is far from over.
In the year to September, inflation, or the rate at which prices rise, was 8.2%, down from 8.3% in August.
Rising consumer prices in the United States are being closely monitored as the Federal Reserve’s efforts to cool inflation drive up the value of the dollar and global borrowing costs.
To combat rising prices, America’s central bank has aggressively raised interest rates, making the dollar more appealing to investors. In contrast, the Bank of Japan kept interest rates extremely low.
The strength of the dollar on global financial markets has an impact on other major currencies around the world, including the pound and the euro.
(Adapted from Asahi.com)