The Japanese government said Friday that a rapid depreciation of the yen could hurt both the economy and the stability of financial markets, as the country’s currency fell to a 24-year low in the low-140s against the US dollar. Stated.
Japan’s Finance Minister Shunichi Suzuki told a news conference that recent currency movements have been somewhat volatile. The Japanese government is monitoring currency movements “with increased vigilance” and will maintain close contact with monetary authorities in other countries and take “appropriate action” if necessary.
“There is consensus among the G7 and others that excessive volatility and disorderly movements in exchange rates can adversely affect economic and financial stability,” Suzuki said.
The yen dumps against the US dollar as the US Federal Reserve (Fed) hikes rates aggressively to combat inflation, which could continue into next year and could be further increased. said the strategist.
Conversely, the Bank of Japan (BOJ) has maintained its ultra-accommodative monetary policy, setting its short-term benchmark interest rate at minus 0.1% and continuing to guide 10-year JGB yields around 0%.
The Bank of Japan’s dovish policy stance has pushed interest rates between Japan and the US higher, which has led to US dollar buying and yen depreciation, triggering volatility in Japan’s stock market.
On the other hand, a weaker yen is a boon to Japan’s export-driven economy, with profits from exporters made abroad being boosted when repatriated, and a weaker yen than its main counterparts in foreign markets. will become more competitively priced, investment strategists said. explained.
On the other hand, they said, a weaker yen would further increase the prices of energy and raw material products essential for resource-poor Japan to constantly import.
Japan’s chief spokesman, Chief Cabinet Secretary Hirokazu Matsuno, further underscored the previous day’s remarks on Friday, saying that “rapid fluctuations are not desirable.”
He has previously said that exchange rates should move stably and reflect economic fundamentals.
