The Japan Times

Government maintains warning on weak yen

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Japan will closely communicat­e with the United States and other Group of Seven countries in any actions it takes in response to a rapidly weakening yen, Finance Minister Shunichi Suzuki said on Tuesday.

Suzuki made the remarks as the Japanese currency hovered around 20-year lows against the dollar, stoking worries about boosting the cost of living to households.

“Stability is important and rapid moves as seen recently are undesirabl­e,” Suzuki told reporters after a Cabinet meeting.

The remarks are in line with warnings from Suzuki to keep sharp yen falls in check.

He said any actions would follow the practice agreed with G7 partner economies.

G7 bloc countries have agreed that exchange rates should be determined by markets but that disorderly movements can negatively impact economies and that countries would consult each other on any actions they take in currency markets.

The yen has come under pressure as the Bank of Japan’s resolve to keep interest rates ultraloose goes against a global shift toward monetary tightening, with central banks in the United States, Britain and Australia having raised rates last week.

BOJ Gov. Haruhiko Kuroda has pledged to maintain massive stimulus to support a fragile economic recovery, stressing a weak yen was still beneficial for the economy and would not be a trigger for a rate hike.

The position was reaffirmed by BOJ Executive Director Shinichi Uchida on Tuesday who told parliament the central bank would maintain its current stimulus to support the economic recovery.

Uchida also said the BOJ had no plan to tweak a 50-basis-point band at which the central bank allows the 10-year bond yield to move around its 0% target.

Once welcomed for its boost to exports, a weak yen has emerged as a source of concern for Japanese policymake­rs as it inflates already rising import costs for fuel and raw material.

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