BOJ's Finance chief maintains stance on yen, no change in approach
On Thursday, the yen dropped below the 155 level against the dollar, which is regarded as a significant threshold by the authorities and increases the likelihood of currency intervention.
"When pressed by an opposition lawmaker to intervene in the currency market, Finance Minister Shunichi Suzuki reaffirmed our unchanged position. He emphasized our commitment to closely monitor market developments and take appropriate measures as necessary."
Last month, the Policy Board transitioned to utilizing short-term rates as its primary policy instrument, with guidance set within a range of zero to 0.1 percent. It terminated unconventional monetary easing measures that had diminished the value of the yen, such as the negative interest rate and yield cap program. The BOJ's confidence in attaining stable inflation has been bolstered by strong wage growth.
Although the decision carried symbolic significance, the Japanese yen has persistently depreciated against the U.S. dollar, reaching its lowest point in more than 30 years, crossing the psychologically significant 155 threshold, despite repeated verbal cautions from Japanese officials about potential intervention to support the Japanese currency.
The downside of the depreciating yen has become increasingly evident in recent times, with rising import expenses fueling inflation in Japan. However, it has also spurred companies to increase wages, aiming to assist households in managing the escalating living expenses.
The Bank of Japan (BOJ) declares that it does not actively manipulate monetary policy to manage foreign exchange rates. However, Governor Kazuo Ueda has expressed that they would contemplate a policy adjustment if the consequences of a depreciating yen on inflation "cannot be disregarded."
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