Japan's Suzuki: The weak yen has positive and negative aspects
Japanese Finance Minister Shunichi Suzuki said on Tuesday that there are both advantages and disadvantages of the weak Japanese Yen (JPY), but he is more concerned about the negative aspects of the weak JPY.
Key quotes
“Market dialogue key as long-term rates increase.”
“Aims for appropriate national debt policies in Japan.”
“Hopes for wage hikes above inflation pace.”
“Plans wage increases to combat deflationary mindset.”
“Both advantages and disadvantages of weak Yen.”
“ Market determines levels for currencies.”
“Opposes excessive forex volatility.”
“Will discuss world economy, AI, and other issues.”
“Says the government is watching markets.”
“Will conduct appropriate bond management policy.”
“Says he is closely watching FX moves.”
Market reaction
These comments have little to no market reaction to the Japanese Yen (JPY). At the time of writing, USD/JPY is trading 0.09% higher on the day to trade at 156.38.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.