Newly appointed Japanese Finance Minister Katsunobu Kato stated in a media interview on Monday that the Japanese government will take “necessary responsive measures” to address recent fluctuations in the foreign exchange market and mitigate the negative impacts of drastic exchange rate fluctuations on business activities and households. This statement demonstrates the Japanese government’s concern and determination to respond to the current foreign exchange market situation.

Kato was appointed as Finance Minister when Prime Minister Shintaro Ishiba formed his new cabinet last week. His statement was made during a collective interview with media outlets including Kyodo News, reflecting the new government’s stance on economic and financial issues.

Earlier on the day Kato made the above remarks, there were significant fluctuations in the foreign exchange market. The dollar-yen exchange rate climbed to around 149.10 at one point, reaching its highest level since mid-August, as strong U.S. employment data shattered market expectations for further significant interest rate cuts by the Federal Reserve. This exchange rate movement has raised high concern from the Japanese government.

Regarding the outlook for the Bank of Japan’s monetary policy, Kato stated that he expects the central bank to continue targeting “2% stable and sustainable inflation.” This statement indicates that the new government will continue to support the Bank of Japan’s existing monetary policy direction.

As a former official who served in the Ministry of Finance, Kato particularly emphasized the government’s desire for the Bank of Japan to “communicate thoroughly with the market.” This reflects the government’s emphasis on the transparency of central bank policies and market communication.

The depreciation of the yen remains one of the main challenges facing Shintaro Ishiba’s new government. The weakening yen has led to rising import prices, which in turn has pushed up living costs in Japan, significantly impacting the daily lives of ordinary citizens. This issue has become one of the economic issues that the Japanese government needs to urgently address.

During the tenure of Ishiba’s predecessor, Fumio Kishida, as Prime Minister, the Japanese government repeatedly intervened in the market by buying yen to prevent sharp declines in the currency. This intervention policy reflected the Japanese government’s determination to maintain exchange rate stability.

Kato competed with Ishiba for the presidency of the Liberal Democratic Party at the end of last month but ultimately lost. It is reported that Kato had close ties with the late Prime Minister Shinzo Abe. During his tenure, Abe implemented “Abenomics,” an anti-deflation policy centered on massive monetary easing and large-scale fiscal spending. This background may influence Kato’s policy inclinations in his position as Finance Minister.

Summary of key points:

1. Japan’s new Finance Minister Katsunobu Kato stated that necessary measures will be taken to address fluctuations in the foreign exchange market.
2. The dollar-yen exchange rate recently hit a new high since mid-August, raising concern from the Japanese government.
3. The Japanese government expects the central bank to continue targeting 2% inflation and emphasizes the importance of communication with the market.
4. The depreciation of the yen remains one of the main economic challenges facing the new government, affecting import prices and living costs.
5. Japan has previously intervened in the market multiple times to stabilize the yen exchange rate, and the new government may continue this policy.
6. Kato had close ties with the late Prime Minister Shinzo Abe, which may influence his future policy orientations.