Excessively fast currency movements negative for economy: BOJ chief
Bank of Japan Governor Haruhiko Kuroda said on Thursday that while yen weakness is positive for the Japanese economy, the negative aspects of excessively rapid exchange rate movements should also be noted after the currency fell to a new low. 20-year low against the US dollar.
Speaking at a press conference after a two-day policy meeting, Kuroda said it was “appropriate” to continue the central bank’s powerful monetary easing as the sustainability of recent inflation is in doubt. .
Bank of Japan Governor Haruhiko Kuroda attends a news conference at the central bank’s headquarters in Tokyo on April 28, 2022, after a two-day policy meeting. (Picture of swimming pool)(Kyodo)
“Excessive fluctuations seen recently over a short period of time increase uncertainty about the outlook and make it difficult for companies to come up with business plans,” Kuroda said.
“It is desirable that currency movements are stable, reflecting both economic and financial fundamentals,” he said. “We will be watching the impact of currency movements on the economy and prices very carefully.”
The yen slipped below the psychologically important 130 line against the dollar after the BOJ maintained its ultra-loose monetary policy and showed its determination to defend its ceiling on Japanese long-term interest rates. The US Federal Reserve, meanwhile, is expected to raise rates more aggressively.
The BOJ said it would make purchases of 10-year Japanese government bonds at a fixed rate of 0.25% – the upper limit allowed by the central bank – every business day.
Kuroda said the clear stance is designed to bring stability to financial markets and prevent them from being driven by speculation on the BOJ’s next policy move.
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