Japan Keeps Faith in Weaker Yen as Economy Struggles
Facing the prospect of the first growth-free fiscal year since the 2009 global recession, Japan’s policy makers are keeping faith that a weaker exchange rate will help the world’s third-largest economy.
While the yen’s 26 percent slide against the dollar in the past two years has yet to stoke the nation’s exports and production, Japan’s central bank and economy chiefs in the past week both signaled a green light to a further decline.
The remarks underscore the chance of deeper depreciation as the U.S. Federal Reserve withdraws stimulus and Japan maintains it.
“They’re definitely welcoming further weakness in the yen,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute in Tokyo and a former BOJ official.
The yen, which traded at 106.14 per dollar at 9:07 a.m. in Tokyo, has fallen 3.4 percent in the past three weeks as the European Central Bank moved to add stimulus and Fed officials indicated they’re closer to tightening policy.
For BOJ Governor Haruhiko Kuroda, the inflation implications are a boon as he and his colleagues await the wage-driven increases in consumer prices that would signal a strengthening economy.
“There is no doubt that the weakening yen is positive for Japan’s economy on the whole,” Amari’s deputy, Yasutoshi Nishimura, said in an interview yesterday.
Source: Bloomberg
