The continuing strength of the Japanese yen against the US dollar has raised hopes that the country’s finance ministry will intervene in the foreign exchange markets to weaken the currency.

The yen has steadily strengthened against other currencies since the British referendum on EU membership as investors continue to seek safe-haven from the turmoil in global markets.

Japan’s stock markets have been hard hit by the turbulence with most damage been done to the shares of its biggest exporters as the stronger yen makes their products more expensive abroad

The Japanese finance minister, Taro Aso, has threatened to intervene in the markets in the hope the yen would weaken but traders have been skeptical of the government’s ability to make good on its threat given the strong opposition to deliberate competitive devaluation from Washington.

“Japan has been criticized by the US Treasury secretary, Jack Lew, over its propensity for market intervention to weaken its currency citing the fact that such actions directly contravene G7 agreements on competitive devaluation,” said Kit Morton, chief economist at ISG Global.

Japan has seen the fruits of its endeavors to weaken its currency through massive quantitative easing eroded in recent months. The Prime Minister, Shinzo Abe has had to postpone a planned increase in a controversial sales tax until 2018 over fears that its introduction would further slow the country’s economic growth.

ISG-Global believes that the need for Japan to boost the competitiveness of its exporters will take precedence over the disdain of its biggest trading partners.

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