The Governor of the Bank of Japan (BoJ), Haruhiko Kurodamakes new comments, via Reuters, on the value of the exchange rate.
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The merits of the current BoJ policy outweigh the costsbut is aware of the need to take into account the costs of prolonged easing.
The pace of Japan’s negative interest rate hike will be one of the key factors when the BoJ discusses the exit strategy.
Another factor is how to adjust the BoJ’s huge balance sheet.
We are not at a stage where we can immediately discuss the details of the exit strategy.
Recent price hikes hurt household sentiment and real incomes.
The recent weakness of the yen is not desirable.
The government’s decision to respond to the speculative, sharp and unilateral declines in the yen was appropriate.
It is important that exchange rates move in a stable manner reflecting economic fundamentals.
The weakness of the yen benefits large global companies, but hurts households and companies that depend on domestic demand due to the increase in import costs.
The Bank of Japan will not take monetary policy measures directly aimed at influencing the foreign exchange market.
The strong and unilateral fall of the yen seems to stop since the intervention of Japan in the foreign exchange market.
The dollar has risen almost alone against other currencies reflecting strong US growth.
Many predict that the dollar’s solitary rise probably won’t go on foreveras the US economy could suffer negative growth due to the Fed’s constant rate hikes.
We will delve into the negative rate among the monetary policy options if necessary.
The BoJ has been taking measures, such as the three-tier system for its reserves, to mitigate the damage to financial institutions’ profits from the negative interest rate.
Source: Fx Street
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