Stable currency is vital, says Japan Finance Minister, as yen descends to 3-year low By Reuters

© Reuters. FILE PHOTO: Japan’s new Finance Minister Shunichi Suzuki sporting a protecting masks, amid the coronavirus illness (COVID-19) outbreak, speaks at a information convention in Tokyo, Japan, October 5, 2021. REUTERS/Kim Kyung-Hoon

By Tetsushi Kajimoto

TOKYO (Reuters) -Foreign money stability is “crucial” and Japan’s authorities will scrutinise the financial influence from the international trade strikes, Finance Minister Shunichi Suzuki mentioned on Friday, because the yen slid to its lowest degree since late 2018.

The greenback rose to a near-three-year excessive in opposition to the yen at 113.885 yen on Friday earlier than the minister’s feedback, partly on expectations inflation dangers might prod the U.S. Federal Reserve to boost rates of interest before anticipated. It remained close to that degree in early afternoon buying and selling.

Later Friday, the greenback touched 114.075 yen for the primary time since December of 2018.

“Stability in currencies is essential,” Suzuki instructed a information convention. “We’ll proceed to intently watch forex market strikes and their influence on the economic system.”

Whereas a weak yen pushes up import prices for some corporations and shoppers, it helps exporters, he mentioned.

Japanese policymakers have a tendency to fireside off verbal warnings in opposition to an unwelcome yen rises, which might threaten to derail export-reliant Japanese economic system, the world’s third largest.

In September, Japan’s wholesale inflation hit a 13-year excessive as rising international commodity costs and a weak yen pushed up import prices, placing strain on company margins and elevating the chance of undesirable shopper worth hikes.

“I used to be a bit shocked on the minister’s comment, which gave an impression that he was involved a few weak yen,” mentioned Masafumi Yamamoto, chief foreign exchange strategist at Mizuho Securities.

“He most likely needed to sign a message {that a} weak yen would not make every thing rosy as he wanted to point out a sympathy in direction of shoppers dealing with larger import prices forward of elections.”

That mentioned, nobody available in the market anticipated the federal government to answer the yen strikes at this stage by way of measures reminiscent of intervening by yen-buying, he added.

Japan has stayed away from intervening within the forex market since 2011 when devastating earthquakes and subsequent Fukushima nuclear disaster triggered a spike in a safe-haven yen.

Financial system Minister Daishiro Yamagiwa mentioned “there is no doubt” that rising gas prices would have an effect on resource-deficient Japan’s economic system.

Nonetheless, Yamagiwa declined to touch upon the financial impacts of a weak yen, saying that commenting on currencies in his capability might “trigger issues”.

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