From left: South Korea’s Finance Minister Choi Kyung-hwan, Bank of Japan Governor Haruhiko Kuroda and Japan’s Finance Minister Taro Aso with fellow delegates after a meeting of G-20 finance ministers and central bank governors during the IMF-World Bank annual meetings in Washington on Friday. Kuroda said there was no gap in views between the Japanese government and the central bank that a weak yen was positive for the world’s third-largest economy.
Reuters
Bank of Japan Governor Haruhiko Kuroda said there was no gap in views between the government and the central bank that a weak yen was positive for the world’s third-largest economy.
He also appeared unfazed by recent sharp declines in global stock and crude oil prices, saying that the rise in market volatility was likely temporary and came from a very low level.
Kuroda said that while a weak yen boosts exports and revenues at companies operating overseas, it hurts consumers and service-sector firms by pushing up import costs.
“Taken together, a weak yen is positive for Japan’s economy as long as it reflects fundamentals,” Kuroda told a news conference on Friday after attending a Group of 20 finance leaders’ gathering.
Kuroda has repeatedly said a weak yen was beneficial for Japan’s economy, which had historically suffered from a strong yen that hurt exports and aggravated deflation by keeping import prices low. But Prime Minister Shinzo Abe has recently said the government must be mindful of the de-merits of a weak yen, paying heed to growing complaints from lawmakers that the yen’s sharp declines were hurting small firms and households of their constituencies by pushing up gasoline and raw material costs.
The slight difference in tone has led some market participants to believe the BoJ and the government were sending conflicting messages on how they perceived the effect of the weak yen on the economy, a view Kuroda tried to dispel.
“I don’t think there is any difference in views,” he said in a joint news conference with Finance Minister Taro Aso, who also attended the G20 meeting and directly oversees currency policy.
Aso declined to comment on the exchange-rate moves. Aso and Kuroda were both optimistic about Japan’s economy, stressing that it was continuing to recover moderately from a temporary slump caused by a sales tax hike in April.
“The effect of the tax hike is ebbing. With the job market strong and household income rising, consumption will gradually rebound,” Kuroda said.
Kuroda also said sharp falls in oil prices were beneficial for Japan as the country needs to pay less for its huge oil imports.
“At this point, I don’t think we need to worry too much about the rise in market volatility from low levels,” he said.
Stocks in major global markets closed out one of their worst weeks of the year on Friday, with an index of global equities hitting an eight-month low, and oil slumping to a four-year low as worries about slowing global economic growth darkened the investment outlook.
Aso met his South Korean counterpart Choi Kyung-hwan for bilateral talks on Friday on the sidelines of the G20 meeting.
