Bank of Japan Governor Haruhiko Kuroda attends a news conference in Tokyo, Japan March 16, 2020 in this photo released by Kyodo. Mandatory Credit Kyodo/via REUTERS
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- Cost-push inflation hurts economy – BOJ Kuroda
- BOJ maintains ultra-loose policy – Kuroda
- Government to watch FX moves including weak yen – finmin Suzuki
TOKYO, March 25 (Reuters) – Bank of Japan Governor Haruhiko Kuroda on Friday reiterated his view that a weak yen is benefiting the economy as a whole, brushing off concerns that the currency’s slide to multi-year lows will do more harm to the resource than could be of use. poor, import-dependent country.
Because of structural changes in Japan’s economy, the benefit of a weak yen would come from enhancing the value of profits made by overseas companies rather than increasing export volumes, Kuroda said.
“In my opinion, nothing has changed now, a weak yen is generally positive for Japan’s economy,” he told parliament.
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The yen headed for its worst week in two years, battered by Japan’s rising import costs and ultra-low interest rates. It fell to a new multi-year low of 121.84 per dollar on Friday.
Kuroda said the recent increase in import prices was mainly due to global commodity inflation and not the weak yen.
While consumer prices could rise to around the BOJ’s 2% target from April, the central bank is in no rush to withdraw stimulus as any rise in inflation must be matched by steady increases in wages, jobs and corporate profits, Kuroda said.
“Cost-boosting inflation unaccompanied by wage increases will hurt Japan’s economy,” he said, weighing on household real incomes and the profits of import-dependent companies.
“As such, it will not lead to a sustainable achievement of our target price. Therefore, the BOJ will continue to maintain strong monetary easing,” Kuroda said.
Speaking at the same parliamentary session, Finance Minister Shunichi Suzuki said the government will continue to closely monitor currency movements, including recent yen declines, and their impact on the economy.
“Exchange rate stability is important and high volatility is undesirable,” Suzuki said, repeating his verbal warning against excessive yen depreciation.
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Reporting by Leika Kihara; Edited by Jacqueline Wong & Shri Navaratnam
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