Japan's Digital Minister Taro Kono clarified that he is not directly requesting the Bank of Japan (BoJ) to raise rates now.
“Monetary policy decision is up to BoJ,” he added.
Responding to Kono’s comments, Finance Minister Shunichi Suzuki said he “hopes that politicians should be mindful about commenting on market-related comments due to their impact.”
Additional comments
Also will attend G7 meetings to be held on the sidelines of G20 meetings.
Plan to discuss various topics including world economy and currency at G20.
Meanwhile, Japan’s private sector economic council members said that they cant overlook the weak Yen negative effects.
The country’s Prime Minister Fumio Kishida also came out on the wires to warn about the impact on inflation due to the Yen depreciation.
He said that the “government must be vigilant about the impact of rising prices, driven in part by a weak Yen, on the economy to achieve domestic-demand driven recovery.”
Need to be cautious about effects of rising prices due to weak Yen,” PM Kishida warned.
Market reaction
USD/JPY has edged a tad lower following these comments, currently trading near 157.35, almost unchanged on the day.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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