Japan will respond "resolutely" to excessive weakness in the yen, Finance Minister Shunichi Suzuki said Wednesday, after the currency fell to a 34-year low against the U.S. dollar despite the Bank of Japan's first interest rate hike in 17 years last week.

Suzuki told reporters that appropriate action would be taken "without excluding any options" to cope with excessive moves in the yen, driving speculation that the government may intervene in the currency market for the first time since late 2022.

He also said Japan will be closely monitoring developments in the market with a "high sense of urgency."

At a parliamentary session, meanwhile, BOJ chief Kazuo Ueda said the central bank is "closely" watching the impact of the yen's movements on the economy and prices, but declined to comment on currency market moves.

On March 19, the BOJ scrapped its negative interest rate policy in its first rate hike since 2007, overhauling the central bank's unorthodox monetary easing framework that had been implemented over the past decade to fight deflation.

The central bank, however, pledged to maintain monetary easing for now, prompting market participants to assume the interest rate gap between Japan and the United States is unlikely to shrink sharply.

Earlier in the day, BOJ board member Naoki Tamura said short-term interest rates would remain near zero for the time being, while the market is expecting the U.S. Federal Reserve to go ahead with three rate cuts this year.

The yen briefly sank near the 152 line against the dollar in Tokyo on Wednesday. The currency last depreciated to 151.94 against the dollar in October 2022, before Japan stepped into the market by buying the yen for the dollar.

Since the late Shinzo Abe became Japan's prime minister in December 2012, the yen has been on a downward trend due largely to his economic policy, dubbed "Abenomics," which included drastic monetary easing, massive fiscal spending and a growth strategy.

A falling yen is usually a boon for exporters as revenue from Japanese-made products sold overseas is inflated in yen terms, but it also drives up import prices and Japan depends on imports for more than 90 percent of its energy needs.

Japan's nationwide core consumer price index, excluding volatile fresh food, rose 2.8 percent in February from a year earlier, above the BOJ's 2 percent target for the 23rd straight month, government data showed late last week.

==Kyodo

© Kyodo News International, Inc., source Newswire