By love-89.com In a recent interview, Japan’s newly appointed Finance Minister, Katsunobu Kato, highlighted the importance of closely monitoring how exchange rate fluctuations impact citizens’ lives and overall economic activities. “We must take necessary measures while paying close attention to how changes in the exchange rate affect people’s lives and economic activities,” Kato emphasized.
Kato recognized that the strength or weakness of the yen brings both advantages and challenges. For instance, while a weaker yen has raised import costs for essential items like food and energy, it has simultaneously boosted profits for exporters operating in foreign markets.
The yen has seen considerable volatility against the dollar in recent months, largely driven by the differing monetary policies of the U.S. and Japan, along with uncertainties about the global economic landscape. At the start of July, the yen dropped to 162 against the dollar, but by Monday, it had rebounded to around 148.40.
Recently, the yen depreciated again due to reduced expectations for an imminent interest rate hike from the Bank of Japan (BoJ), coupled with potential changes in the Federal Reserve’s rate cut trajectory.
In the interview, Kato expressed optimism that the BoJ would adopt appropriate monetary policies to reach its stable inflation target of 2%. He emphasized the need to communicate this policy strategy to the market carefully, reiterating that the specific measures would ultimately be decided by the BoJ.
Following his recent appointment, Prime Minister Shigeru Ishiba stated that Japan is not quite ready for another interest rate increase. Despite recent inflation data showing an uptick, the Japanese government has not yet declared an end to deflation. Ishiba stressed the significance of sustaining what he described as a virtuous cycle of synchronized wage and price growth.