Bank of Japan Gov. Toshihiko Fukui said Monday the central bank will closely watch developments in overseas economies and financial markets, apparently expressing caution over the rising yen.
Fukui also said the BOJ is firmly committed to maintaining its quantitative-easing policy until the consumer price index logs zero percent or above on a year-on-year basis — a move intended to help the budding economic recovery.
Fukui’s comments came at the outset of a quarterly meeting of central bank branch managers, who later voiced concern over the impact of the strong yen on regional economies.
“Business leaders (in the Kansai area) tell us that the yen’s appreciation should stop around this level, calling for stability in exchange rates,” Eiji Muto, general manager of the BOJ’s Osaka branch, told reporters after the one-day meeting.
Muto said business sentiment has improved, while exports from the Kansai area, especially to Asia, have enjoyed an upswing.
The Asian economy has rebounded since the epidemic of severe acute respiratory syndrome was overcome, he said.
These exports include digital and related home appliances, such as DVD players, plasma-display televisions and digital cameras.
The Nagoya branch reported a rise in exports of automobiles and machine tools, though it cautioned that the rising yen may affect corporate finance and the real economy.
The one-day meeting came as Japan’s economy shows signs of a recovery.
Fukui said Japan’s export climate and business sentiment have improved due to the robust recoveries of the U.S. and East Asian economies, and that exports and production are likely to gain steam, bringing positive effects to the economy.
Policymakers are also concerned a stronger yen could hurt Japanese exporters by making their goods more expensive foreign competition, causing the export-driven recovery to falter.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.