Japan's top currency diplomat Masato Kanda said a weak yen brings both merits and demerits to the economy due to the country's changing export patterns and increasing reliance on imports.
The boost a weak yen gives to Japan's export volumes has declined compared with the past, as manufacturers target shipments of high-end, state-of-the-art products overseas rather than compete with price cuts, said Kanda, the country's vice finance minister for international affairs.
A weak yen, however, still inflates the yen-denominated profits Japanese companies earn overseas, he said.
"The demerit of a weak yen is that it pushes up the import cost of energy and food, thereby increasing household burdens," he said, acknowledging growing domestic concerns about the potential side-effects of a weak currency.
Kanda's remarks underscore how a weak yen is becoming a tricky political issue for the Finance Ministry, which has historically focused on preventing a strong currency from hurting the country's export sector.
"There are both positive and negative effects (on the economy) from a weak yen. It's hard to say which is bigger, because the pros and cons of a weak yen differ for each entity," Kanda said in an interview Monday.
Imports play an increasingly important role in Japan's economy, making up 16% of gross domestic product now, compared with just 9% two decades ago, he said.
"We need to guide policy based on the understanding that the mechanism in which exchange-rate moves affect the economy has changed," he said.
But Kanda stressed that global energy and commodity inflation, rather than the weak yen, was mostly to blame for pushing up the cost of living for households.
"At least for now, the rise in imported goods prices is due largely to rising energy costs and global inflation," he said.