TOKYO (Reuters) – Japan is worried not nearly excessive yen weakening but in addition a slow depreciation within the Japanese currency because it boosts living costs through higher import bills, Finance Minster Shunichi Suzuki said on Wednesday.
Suzuki’s comment highlighted policymakers’ concern in regards to the negative impacts of a weaker currency on a fragile economic recovery from the COVID-19 pandemic.
“What we should always keep in mind is surging import prices attributable to a weak yen (are) raising inflation,” Suzuki told a parliament session. “In that sense, stable or gradual yen weakening is an incredible source of concern.”
Suzuki didn’t elaborate but his comment may signal a change in the federal government’s stance of specializing in the speed of yen moves in responding to the foreign exchange market.
The federal government spent a record $43 billion supporting the yen last month after it slumped to a 32-year low. In September, it conducted its first yen-buying intervention since 1998.
Suzuki also said that currency rates needs to be determined by markets, while being affected by various aspects.
Suzuki added that Japan must keep on with fiscal discipline in order to not lose market confidence within the yen currency.
The world’s No.3 economy rebounded firmly in April-June backed by consumer and business spending as a result of a pullback from COVID curbs, but a slowdown in China and other economies and cost-push inflation driven by a weak yen are clouding the outlook.
(Reporting by Tetsushi Kajimoto; Editing by Muralikumar Anantharaman and Kim Coghill)
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