Bank of Japan (BoJ) Governor Kazuo Ueda voiced concerns about the rapid and unilateral declines in the Japanese Yen on Wednesday. According to Reuters, Ueda stated that such movements are undesirable and have a negative impact on the Japanese economy.
Ueda refrained from commenting on the recent fluctuations in the foreign exchange market, emphasizing the importance of ensuring that currency movements reflect underlying economic fundamentals. He noted that the effects of these movements vary depending on the size and sector of companies, underscoring their significant influence on the economy and prices.
The BoJ Governor acknowledged that foreign exchange movements are among the key factors that affect the economy, including inflation trends. Ueda warned that if the risk of a weak yen significantly impacting inflation trends is high, the central bank may need to consider adjusting its monetary policy in response.
Despite his comments, Ueda also emphasized the importance of monitoring the impact of a weak yen on inflation, especially as corporate wage and price-setting behaviors evolve. Despite this warning, however, there was relatively muted market reaction, with only a modest 0.4% increase in USD/JPY pair trading at 155.33 at press time.
