Bank of Japan Governor Haruhiko Kuroda said on Friday that the yen’s recent rapid movements were “unfavourable” for Japanese businesses, adding to a chorus of warnings from monetary authorities about high volatility following the fall. currency to a 24-year low against the US dollar.
Kuroda made the remarks after meeting Prime Minister Fumio Kishida at his office to discuss recent economic and financial developments. The BOJ chief later told reporters he had received “no request” from the prime minister.
“When we see (the dollar) fluctuating 2 yen or 3 yen a day, we say these moves are fast,” Kuroda told reporters. “Rapid fluctuations in exchange rates are unfavorable because they make business management unstable and increase uncertainty about the outlook,” he said.
The divergence in the BOJ’s monetary policy stance from that of its counterparts like the US Federal Reserve has caused the yen to weaken as the Japanese central bank is in no rush to raise interest rates.
The yen also fell against the euro to its lowest level in more than seven years after the European Central Bank raised its benchmark rate by an unprecedented 0.75 percentage points on Thursday.
A weak yen is seen as a plus for exporters, but its negative side in terms of higher import costs has received more attention at a time when soaring energy and food prices, blamed on Russia’s war in Ukraine, deals a blow to the resource-poor nation.
“We will closely monitor the development of the situation,” Kuroda said.
The yen strengthened against the dollar immediately after the meeting. It was trading in the 142 area, after hitting a 24-year low near 145 earlier this week.
Kuroda’s remarks came shortly after Finance Minister Shunichi Suzuki said the yen’s recent swings, partly due to speculative moves, are “far from stable, reflecting (economic) fundamentals.”
“We are extremely concerned about rapid fluctuations, which are unfavorable,” Suzuki told a news conference, adding, “I said we were ready to take the necessary steps without ruling out any options.”
Verbal warnings from Japanese monetary authorities against “swift and unilateral” movements in the currency market did not lead to a respite in yen selling.
The Federal Reserve is expected to go ahead with another rate hike at its policy meeting later this month to curb soaring inflation.
A relatively modest recovery in inflation in Japan has placed the BoJ on the opposite end of the monetary policy spectrum. Kuroda said monetary easing is needed to support the economy amid its recovery from the COVID-19 fallout, ruling out a short-term rate hike.
https://english.kyodonews.net/news/2022/09/96396889f692-breaking-news-yen-moves-far-from-stable-based-on-fundamentals-japan-finance-chief.html
Category: Japan
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