BoJ Governor Kazuo Ueda expressed concerns about the rapid and unilateral declines in the Japanese Yen on Wednesday. According to Reuters, Ueda stated that such movements are undesirable and have a negative impact on the Japanese economy.
Ueda refrained from commenting on the recent fluctuations in the foreign exchange market, emphasizing the importance of ensuring that currency movements reflect underlying economic fundamentals. He noted that the effects of these movements vary depending on the size and sector of companies, underscoring their significant influence on the economy and prices.
The BoJ Governor acknowledged that foreign exchange movements are among the key factors that affect the economy, including inflation trends. Ueda warned that if the risk of a weak yen significantly impacting inflation trends is high, the central bank may need to consider adjusting its monetary policy in response.
Ueda also emphasized the importance of monitoring the impact of a weak yen on inflation, especially as corporate wage and price-setting behaviors evolve. Despite his comments, however, market reaction was relatively muted, with only a modest 0.4% increase in USD/JPY trading at 155.33 at press time.
In summary, Bank of Japan (BoJ) Governor Kazuo Ueda expressed concerns about rapid and unilateral declines in Japanese Yen on Wednesday while acknowledging their negative impact on Japanese economy. He emphasized that currency movements should reflect underlying economic fundamentals while warning that foreign exchange movements could significantly impact inflation trends if there is a risk of weakening Yen’s value too much.
However, despite his comments, market reaction was relatively muted with only a modest increase in USD/JPY pair trading at 155.33 at press time.