By Tetsushi Kajimoto and Kentaro Sugiyama
TOKYO -A senior Japanese government official said on Wednesday that there was no “good or bad” in exchange rates, in remarks that suggested Tokyo was not ready to take immediate action to shore up the weakening yen. In an interview with Reuters, Deputy Chief Cabinet Secretary Seiji Kihara reiterated authorities’ common refrain that sharp moves in currency rates were undesirable and that the government would closely watch the impact of a softer yen on the economy.
However, asked about growing concerns that the falling yen was problematic for Japan — including from its own finance minister, Shunichi Suzuki — Kihara said: “There’s no such thing as good or bad” in exchange rates. “Stability is important.”
A weak yen, once a blessing for the export-led economy, has now added to import costs, particularly for fuel amid the war in Ukraine. That is threatening to derail Japan’s frail economic recovery as rising prices hit consumers and companies.
The dollar at one point scaled a fresh two-decade peak to the yen of 129.43 yen on Wednesday, compared with around 114 yen at the beginning of March.
Some investors said a fall beyond 130 yen could be a trigger for authorities to intervene to prop up the currency. But others doubt such operations could halt its downtrend for long, with the U.S. Federal Reserve about to tighten policy and the Bank of Japan (BOJ) set to keep its policy super-loose for some time.
BOJ Governor Haruhiko Kuroda, who has long argued that a weak yen was positive for the economy as a whole, tweaked his remarks this week to warn sharp yen weakening was negative.
Asked whether the central bank should reverse its massive stimulus and raise interest rates to boost the yen, Kihara would not comment. Instead, he said it was up to the central bank to choose whatever tools were available to meet its 2013 joint statement with the government, including a 2% inflation goal.
Kihara declined to speculate on the reasons behind the yen’s weakness, and whether current moves were rapid enough to warrant authorities’ action. He said he was not in a position to answer as it was up to currency authorities to act appropriately on a daily basis.
Yen-buying intervention has been very rare. The last time Japan intervened to support its currency was in 1998 in the wake of the Asian currency crisis. Japan has stayed away from the market since 2011 when it intervened heavily to stem yen strength after the devastating earthquake triggered a nuclear crisis.
(Reporting by Tetsushi Kajimoto and Kentaro Sugiyama; Editing by Chang-Ran Kim and Kim Coghill)
