David Solomon, chairman and CEO of Goldman Sachs, became the latest high-profile banking figure this week to warn that the US Federal Reserve may not cut interest rates at all in 2024. His words will have added to the gloom in Japan and Korea, where policymakers have been struggling to prop up their currencies against the dollar.
In mid April, Japan finance minister Shun'ichi Suzuki said he was watching currency moves closely and would provide “a thorough response as needed”. The sentiment was echoed by the country’s chief cabinet secretary, Yoshimasa Hayashi.
The very next day saw the first-ever trilateral meeting of finance ministers from Japan, Korea and the US. In a press release issued afterwards, Japan and Korea expressed “serious concerns” about the recent sharp depreciation of the yen and won, with the former hitting its lowest level since 1990.
A big strengthening of the yen in early May has led to speculation that Japan has intervened to support it, but this will only become clear when the country's ministry of finance publishes its monthly intervention data.
Korea, for its part, has publicly taken action; market stabilising efforts contributed to a $6 billion drop in the country’s FX reserves in April after the won had fallen to levels last seen in November 2022.
