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Stable currency is vital, says Japanese finance minister, as yen drops to 3-year low By Reuters

By on October 15, 2021 0

© Reuters. FILE PHOTO: New Japanese Finance Minister Shunichi Suzuki wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, speaks at a press conference in Tokyo, Japan, on October 5, 2021. REUTERS / Kim Kyung-Hoon

By Tetsushi Kajimoto

TOKYO (Reuters) – Monetary stability is “very important” and the Japanese government will carefully consider the economic impact of the recent decline in the yen, Finance Minister Shunichi Suzuki said on Friday.

The dollar hit an almost three-year high against the yen of 113.885 yen on Friday ahead of the minister’s comments, in part on expectations that inflation risks could push the US Federal Reserve to raise interest rates more sooner than expected. It remained close to this level in the early afternoon.

“Currency stability is very important,” Suzuki said at a press conference. “We will continue to closely monitor movements in the forex market and their impact on the economy.”

While a low yen increases import costs for some businesses and consumers, it helps exporters, he said.

Wholesale inflation in Japan hit a 13-year high in September, with rising global commodity prices and a weak yen pushing up import costs, putting pressure on corporate margins and increasing risk unwanted increases in consumer prices.

“I was a little surprised by the minister’s remark, which gave the impression that he was concerned about the weakness of the yen,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.

“He probably wanted to signal a message that a weak yen doesn’t make everything rosy because it had to show sympathy for consumers facing higher import costs ahead of the election.”

That said, no one in the market expected the government to respond to yen movements at this point with measures such as intervention by buying yen, he added.

Economy Minister Daishiro Yamagiwa said “there is no doubt” that a weak yen would affect the resource-poor economy of Japan as it increases the cost of energy.

He declined to comment further, saying commenting on currencies in his capacity could “cause problems.”

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