TOKYO — Bank of Japan Governor (BOJ) Haruhiko Kuroda said on Tuesday the yen’s recent moves were “somewhat rapid,” joining a chorus of policymakers who have warned that sharp falls in the currency could hurt the country’s import-reliant economy.
But Kuroda also repeated his view that a weak yen benefits Japan’s economy as a whole, in contrast to some market views that its decline is doing more harm than good to the economy by pushing up import costs.
“Recent (yen) moves have been somewhat rapid,” Kuroda told parliament, adding that the BOJ was carefully watching currency moves due to their “huge” impact on the economy and prices.
“It’s extremely important for currency rates to move stably reflecting economic and financial fundamentals,” Kuroda said.
The yen has lost about 6% against the dollar since the start of March and briefly traded at more than 125 yen per dollar level on Monday last week – the first time it had done so since August 2015. It was trading at around 122.5 yen on Tuesday.
Kuroda also reiterated the BOJ’s resolve to keep monetary policy ultra-loose, even as rising fuel costs are expected to push consumer inflation close to its 2% target.
“We will patiently maintain powerful monetary easing to support an economy still in the midst of recovering from the COVID-19 pandemic’s impact,” he said, speaking before parliament in semi-annual testimony on the BOJ’s actions.
BOJ Executive Director Shinichi Uchida told the same parliament session that consumer inflation will likely pick up to around 2% and stay there for some time, due to surging energy costs and the dissipating effect of cellphone fee cuts.
“Such cost-push inflation … could hurt the economy and may weigh on trend inflation,” Uchida said. “Cost-push inflation alone won’t help Japan achieve sustainable price growth.”
Surging fuel and raw material prices, driven by the war in Ukraine, have pushed up Japan’s wholesale inflation to record levels and prodded more companies to pass on higher costs to households.
(Reporting by Leika Kihara; Additional reporting by Daniel Leussink; Editing by Kenneth Maxwell and Edwina Gibbs)