Published 10:57 IST, August 2nd 2024
Japan's finance minister hopes yen rebound will lower import costs
The yen's slide this year has been a boon for exporters but raised concern that higher import costs would fuel inflationary pressures.
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Japan is closely monitoring foreign exchange movements and hopes the recent rebound in the yen can push down import costs, Finance Minister Shunichi Suzuki said on Friday.
After languishing at 38-year lows below 160 per dollar for much of July, the yen staged a sharp rally in the days leading up to and after the Bank of Japan's decision on Wednesday to raise interest rates.
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"Foreign exchange movements have both positive and negative impacts (on the economy), but our biggest concern right now is their impact on import prices," Suzuki said at a regular press conference.
"We are hoping that import prices will cool down to certain levels if the yen's weakness is reversed. Also from this perspective, we're closely monitoring markets," he said.
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The yen's slide this year has been a boon for exporters but raised concern that higher import costs would fuel inflationary pressures. A yen rising in value can help take some of the pressure off of import prices.
Suzuki reiterated it was important currencies move in a stable manner, reflecting economic fundamentals and that, in response, Tokyo would act appropriately.
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"Excessive foreign exchange movements could increase uncertainties for corporate activities, therefore affecting people's lives," he said.
He also said the authorities will closely monitor stock market moves, after Japan's benchmark Nikkei average plunged about 5 per cent on Friday in the wake of a weak Wall Street.
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But he declined to comment on the market plunge, saying that it was premature to predict an impact from stock movements of just one or two days.
US stocks fell on Thursday after a round of economic data raised concerns for investors that US economic growth may slow down faster than expected. Uncertainties over Japan's monetary policy tightening path also weighed on the Tokyo market.
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In a separate press conference, Japanese Chief Cabinet Secretary Yoshimasa Hayashi noted that markets determine stock prices based on various factors, such as economic conditions and corporate activity.
"The government will continue to do the best to manage economic and fiscal policies while paying close attention to markets with a sense of urgency," the top government spokesperson said.
10:57 IST, August 2nd 2024