Japan's Finance Minister Reiterates Unchanged Stance on Exchange Rate, Economic Data Supports Central Bank Rate Hike

(1) Japanese Finance Minister Katayama Gatsu stated that after the yen strengthened to its highest level since February, Japan's exchange rate policy stance has not changed. The authorities will continue to work to maintain an orderly foreign exchange market and will keep close communication with US Treasury Secretary Baisente. (2) Katayama emphasized that since the joint intervention by Japan and the US at the beginning of August, Japan's policy "has not changed at all." The recent significant strengthening of the yen (at one point surpassing the 155 mark, trading near 153 in early trading on Tuesday, noticeably appreciating from the 160 level a week ago) was partly driven by heightened market expectations of a central bank rate hike, and the authorities have not carried out a clear new round of intervention. (3) On Tuesday morning, data showed that Japan's annualized GDP growth rate for the second quarter was revised up to 1.4%, and wage growth in July reached the fastest pace in nearly 30 years. These data provide further support for the Bank of Japan to raise interest rates at its policy meeting next week.