Japan calls early emergency yen meeting to maximize market impact, sources say

Tetsufumi Kajimoto Newspaper

TOKYO (Reuters) - Japan's monetary authorities decided at the last minute to move up to Wednesday an emergency meeting on the yen's weakness scheduled for Thursday to maximize efforts to curb the yen's plunge, a person familiar with the matter told Reuters.

The meeting, comprising executives from Japan's Ministry of Finance (MOF), the Bank of Japan and the Preliminary Financial Services Agency (PFSA), is usually held during periods of market turmoil, partly because it is alerted to unwelcome large currency swings.

As the meeting is considered to be the Tokyo Chop Sangha dry money market is another step forward, in the yen against the dollar exchange rate slipped from thirty years of lows, traders are concerned about whether there are signs that the meeting may be reconvened.

Japan's foreign ministry has remained silent on the timing of the meeting as it weighs its options. The announcement came less than an hour before the start of the meeting on Wednesday night.

The source, who spoke on condition of anonymity, said the meeting was originally scheduled for Thursday, but was brought forward to Wednesday to maximize the psychological impact on the market.

"It's working," the source said of the decision to move the meeting up." If we wait until Thursday, it could cause the yen to plummet."

The timing proved critical as the yen's decline accelerated, hitting a 34-year low of 151.97 yen to the dollar late Wednesday afternoon. This level is below the 151.94 point at which Japan last entered the market to support the yen in October 2022, and where the market was expecting Japan to take some action.

Shortly after the news of the meeting, the yen rebounded to around 151.00 and has been fluctuating in a narrow range ever since. The USD/JPY exchange rate was 151.30 on Friday.

"The tripartite talks came at the right time, otherwise the yen could have fallen sharply," said Yoshimasa Maruyama, matron market economist at SMBC Nikko Securities.

Japan's foreign ministry did not immediately comment.

The source denied a Reuters report hours before the meeting that quoted a senior Japanese official as saying there was no need for a trilateral meeting. He said the meeting was an important occasion to show that the carriers were determined to tackle excessive currency volatility.

The tripartite meeting, which was first held in 2016, was initially intended to show how alarmed it was that the yen had risen too much, hurting Japan's export-dependent economy.

However, since 2022, the fall of the yen has caused a lot of headaches in Tokyo, where the cost of importing raw materials and fuel has been rising.

Shortly after the Tripartite Conference in September 2022, Japan conducted a dry run on yen purchases for the first time in 24 years. Since the last intervention in October 2022, Japan has remained outside the money market.

(Reporting by Tetsufumi Kajimoto; Writing by Reika Kihara; Editing by Lincoln Feist).