The Japanese government must take the necessary steps to counter excessive declines in the yen, a senior government official said on Sunday, as the currency slips to its weakest level against the dollar in 24 years.
The comments by Seiji Kihara, Deputy Chief Cabinet Secretary in Prime Minister Fumio Kishida’s government, are the latest to underscore the authorities’ deep concern over the fall of the yen.
Kihara also said the government would consider “in the not-too-distant future” easing strict border measures to further open Japan’s borders to foreign visitors, such as scrapping daily inbound numbers.
“Regarding excessive and one-sided currency movements, we will closely monitor developments and should take necessary action,” Kihara told a TV show when asked about the yen’s recent falls.
The yen has been hammered against the dollar as investors focus on the growing divergence between the US Federal Reserve’s aggressive interest rate hikes and the Bank of Japan’s (BOJ) commitment to keep rates ultra low. .
“I will not comment on monetary and interest rate policy as they fall under the purview of the BOJ,” Kihara said.
The government plans to remove the cap on visitors to Japan by October, the Nikkei newspaper reported on Sunday. The government would also remove current restrictions on visitors not taking part in package tours, the Nikkei said without citing the source of its information.
“A weak yen is more effective in attracting inbound tourism,” Kihara said, adding that further steps should be taken to attract more foreign tourists to the country.
Japan eased border controls from September 7 by raising the cap on daily entries to 50,000 and freeing entry for travelers on package tours without the need for guides.
Analysts say removing the cap and allowing more travelers would be crucial to attracting foreign money and reviving the fragile economy.
On how to finance an expected increase in Japan’s defense spending, Kihara said he would not rule out issuing government debt.
“Our goal is to greatly strengthen the defense of Japan by exploiting various sources of income. We will be flexible on funding and won’t rule out any options,” he said.
In a policy roadmap released in June, the government said it wanted to significantly increase defense spending “over the next five years”, underscoring Tokyo’s interest in bolstering defense at a tense time with its powerful neighbour, China.