By Megumi Fujikawa
TOKYO--Japan's top currency official pledged to stay on guard against potential reaction in the foreign exchange market to President Trump's policies, which have already caused some swings in the yen on Tuesday.
"The markets could respond both positively and negatively if [the Trump administration] makes various announcements in the process of policy management, possibly affecting interest rates in the market, monetary policy and currency levels," Atsushi Mimura, vice finance minister for international affairs, said at an event in Tokyo.
Trump's policies, including higher tariffs, tax cuts and immigration restrictions, are considered inflationary, and they could be revised in the future if inflation accelerates, Mimura said.
"We can only think of what may happen down the road, acknowledging that there is uncertainty," he said.
The comments came as the yen moved nervously against the dollar on Trump's comments during Tuesday's Asia trading. The dollar initially fell on the possibility that the new U.S. president could be taking a more measured approach to tariffs but moved higher after he announced plans to place 25% tariffs on imports from Canada and Mexico on Feb. 1. The pair last stood around 155.10.
Japan's finance ministry is carefully monitoring speculative moves in the currency market on a daily basis, Mimura said, adding that volatility is not desirable.
He also acknowledged that import prices, which could be inflated by a weak yen, are an important element as the government expects real wages to start rising, helping a recovery in private consumption.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
(END) Dow Jones Newswires
01-21-25 0034ET
