Home Stock Market BOJ's Kuroda said the weak yen promises to benefit the Japanese economy

BOJ’s Kuroda said the weak yen promises to benefit the Japanese economy

© Reuters. FILE PHOTO: Bank of Japan Governor Haruhiko Kuroda wearing a protective mask attends a press conference as the spread of coronavirus continues in Tokyo

By Leika Kihara

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda on Tuesday gave a lecture on the benefits of the weak yen, saying it helps producers by inflating the value of profits earned abroad.

Many Japanese manufacturers are now producing the goods they sell abroad, which means a weak yen may not drive export volumes as much as it used to, Kuroda said.

“But there are quite a few positives for Japan from having a weak yen,” he told parliament, as companies making huge profits abroad and will see their yen value increase relative to. with lower yen.

Kuroda added that it is desirable for the currency to move at what should be considered equilibrium, saying “it is not as if the yen is as weak as possible, or as strong as possible”.

Japanese policymakers have historically been very sensitive to the unexpected spike in yen hurting an export-dependent economy.

The BOJ has a record against a sharp appreciation of the yen with additional monetary easing, including steps like a negative rate hike in 2016.

Kuroda said it is difficult to know whether strong US economic growth and the subsequent rise in US Treasury yields will result in the dollar appreciating against the yen, as many market players predict. .

“Currency rates change based on different factors,” he added.

The dollar stood around 109.60 yen on Tuesday, moving comfortably above the 100 yen mark considered by markets as the BOJ line in the sand.

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