Bank of Japan Governor Haruhiko Kuroda said yesterday he saw no problem with recent currency moves as the dollar scaled a six-year high versus the yen due to growing expectations for higher interest rates in the US.
Kuroda declined, however, to comment on whether yen weakness was good for Japan’s economy or whether the yen’s fall was too rapid, which is a slight shift in tone from his statements in recent weeks that Japan would benefit from a weaker currency.
“What’s important is for exchange rates to move in a stable manner reflecting economic fundamentals. That doesn’t necessarily mean exchange rates should always stay at the same level. Of course, they could fluctuate reflecting changes in economic fundamentals,” Kuroda told reporters upon arrival for a weekend meeting of Group of 20 finance ministers and central bank governors.
“What’s undesirable is for exchange rates to move in a way that deviates from economic fundamentals. From this perspective, I don’t see any major problem with current moves,” he said.
Kuroda had repeatedly said Japan’s economy stood to benefit from a weak yen, which he saw as a natural outcome as the country’s monetary conditions stay ultra loose while the US Federal Reserve prepares to tighten policy.
The dollar jumped to as high as 109.46 yen before stepping back a tad to 109.23 yen yesterday.
Recent sharp yen falls have drawn growing complaints from Japan’s business sector that further yen declines may do more harm than good by boosting import costs.
Other Japanese policymakers, such as Finance Minister Taro Aso, have only said that excessive volatility in exchange rates was undesirable, stopping short of signalling whether further yen falls were beneficial for the economy.
