Rapid Fall Of Yen Bad For Japanese Economy: BOJ

The yen's rapid and one-sided depreciation is "negative" for the Japanese economy, Bank of Japan Governor Haruhiko Kuroda said Wednesday after the currency hit a fresh 32-year low versus the US dollar, Mainichi Shimbun reported.

Photo Insert: The yen has fallen precipitously relative to the dollar, and has been recently trading in the 149 zone, surpassing the level that prompted Japanese authorities to intervene last month.

Kuroda told a parliamentary session that the rapid weakening of the yen makes business planning difficult for Japanese companies and thus the government's intervention in September was quite appropriate.

“Currencies should move in a stable manner, reflecting economic and financial fundamentals," Kuroda told a session of the Budget Committee in the House of Councillors.

"The recent depreciation of the yen is rapid and one-sided. This type of yen weakness makes it difficult for companies to draw up business plans and raises uncertainty so it is negative for the economy and unfavorable," the BOJ chief said.

He also said, however, if the weakening of the yen is stable, it is a plus for the economy. A weak yen is often welcomed by Japanese exporters as it boosts their overseas profits in yen terms. But it also inflates import costs for resource-poor Japan.

Market players see the widening interest rate gap between Japan and the United States as a cue to sell the low-yielding yen for the US dollar, with the Federal Reserve expected to keep hiking rates.

In contrast, the BOJ has not budged over its stance of maintaining ultralow rates to support an economy that Kuroda has said is facing downward pressure from higher commodity prices.

"It's appropriate to maintain monetary easing to firmly support the economy and achieve our price stability target in a sustainable and stable manner, accompanied by wage growth," Kuroda said, repeating that the BOJ's policy is not designed to target foreign exchange rates.

The yen has fallen precipitously relative to the dollar, and has been recently trading in the 149 zone, surpassing the level that prompted Japanese authorities to intervene last month.

Caution about another yen-buying, dollar-selling intervention remains in the market as Finance Minister Shunichi Suzuki has kept up his verbal warnings.

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