TOKYO (Kyodo) — Finance Minister Satsuki Katayama said Wednesday the negative side of the yen’s weakness in the foreign exchange market has become evident, after the Japanese currency fell to a nine-month low against the U.S. dollar earlier in the day.
“Although foreign exchange moves have both positive and negative effects on the economy, it is undeniable that the negative impact has become more evident,” Katayama said in a parliamentary session.
“It is important for currencies to move in a stable manner, reflecting (economic) fundamentals,” Katayama also said, a remark taken by some market participants as a verbal warning.
Katayama’s remarks apparently reflect the government’s concerns about the yen’s rapid depreciation, which has accelerated since Prime Minister Sanae Takaichi, an advocate of fiscal spending, won the ruling Liberal Democratic Party’s presidential race in early October.
A weak yen inflates the overseas earnings of Japanese exporters when repatriated, which helps boost wages for their workers. But it also weighs on households as it drives up import costs for the resource-poor nation, and addressing the cost-of-living crisis is a priority for the government.
The yen has come under pressure due partly to market views that it will be difficult for the Bank of Japan to resume interest rate hikes in the near future under the administration of Takaichi, who is also a proponent of monetary easing.
The dollar was trading in the upper 154 yen level in Tokyo afternoon trading Wednesday.
