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The Japanese Yen has been weakening consistently for four years, with the trend exacerbated by a significant interest-rate gap between Japan and the U.S. Since December 2019, the Yen has been the weakest currency in real effective terms, except for the Egyptian Pound, while the Argentinian Peso has been the strongest. The Bank of Japan (BoJ) has intervened to defend its exchange rate, benefiting tourism and exports but increasing import costs and hurting GDP. BoJ Governor Ueda stated that the bank has no plans to issue a Central Bank Digital Currency (CBDC) with a negative rate and is prepared to respond to significant yield increases. Ueda also emphasized that market forces should determine long-term yields and that monetary policy will be adjusted if inflation moves as expected. BoJ Deputy Governor Himino highlighted that firms would have more flexibility in setting prices if prices and wages rise moderately together and stressed the importance of asset price movements as a transmission channel of monetary policy. Himino also mentioned that policymakers need to be vigilant about the impact of prolonged easy monetary policy on productivity and potential growth. Himino added that FX rates have various impacts on economic activity and that the BoJ is guiding monetary policy to achieve underlying inflation around 2%.
⚠️ BOJ'S HIMINO: FX FLUCTUATION HAS VARIOUS IMPACT NOT JUST VIA IMPORT COSTS BUT ON ECONOMIC ACTIVITY
BOJ'S HIMINO: IT'S INAPPROPRIATE FOR MONETARY POLICY TO TARGET FX RATES.
⚠️ BOJ'S HIMINO: **SEVERAL MEASUREMENTS WE LOOK AT ALL SHOW UNDERLYING INFLATION STILL SHORT OF 2%, BUT GRADUALLY ACCELERATING TOWARD THAT LEVEL **WE NEED TO LOOK NOT JUST AT PRICE DATA, BUT VARIOUS FACTORS LIKE WAGE AND CORPORATE BEHAVIOUR, IN GAUGING UNDERLYING INFLATION
BOJ'S HIMINO: WE ARE GUIDING MONETARY POLICY TO ACHIEVE A SITUATION WHERE UNDERLYING INFLATION, EXCLUDING ONE-OFF FACTORS, MOVE AROUND 2%.
⚠️ BOJ'S HIMINO: WE ARE GUIDING MONETARY POLICY TO ACHIEVE A SITUATION WHERE UNDERLYING INFLATION, EXCLUDING ONE-OFF FACTORS, MOVE AROUND 2%
⚠️ BOJ'S HIMINO: WHEN EASY MONETARY POLICY LASTS FOR EXTREMELY LONG PERIOD OF TIME, POLICYMAKERS MUST BE VIGILANT TO POTENTIAL IMPACT IT HAS ON ECONOMY'S PRODUCTIVITY, POTENTIAL GROWTH
BOJ'S HIMINO: WHEN EASY MONETARY POLICY LASTS FOR AN EXTREMELY LONG PERIOD OF TIME, POLICYMAKERS MUST BE VIGILANT TO THE POTENTIAL IMPACT IT HAS ON THE ECONOMY'S PRODUCTIVITY & POTENTIAL GROWTH.
BOJ'S HIMINO: IN THE ECONOMY FACING EFFECTIVELY A ZERO LOWER BOUND, ASSET PRICE MOVES SUCH AS FX, STOCKS AND PROPERTY PRICES ARE LIKELY TO SERVE AS A KEY TRANSMISSION CHANNEL OF MONETARY POLICY.
⚠️ BOJ'S HIMINO: IN ECONOMY FACING EFFECTIVE ZERO LOWER BOUND, ASSET PRICE MOVES SUCH AS FX, STOCKS AND PROPERTY PRICES ARE LIKELY TO SERVE AS KEY TRANSMISSION CHANNEL OF MONETARY POLICY
⚠️ BOJ DEPUTY GOVERNOR HIMINO: FIRMS WILL LIKELY HAVE MORE FREEDOM IN SETTING PRICES FLEXIBLY WHEN PRICES, WAGES ARE RISING MODERATELY IN TANDEM
BOJ'S DEPUTY GOV. HIMINO: FIRMS WILL LIKELY HAVE MORE FREEDOM IN SETTING PRICES FLEXIBLY WHEN PRICES AND WAGES ARE RISING MODERATELY IN TANDEM.
Bank of Japan Governor Ueda suggests that market forces should dictate long-term yields, emphasizing economic principles over intervention. #BOJ #economicpolicy
BOJ stance is to let market forces set long-term rates, governor says https://t.co/CwZ13bIAPG https://t.co/te2Dp2Y9WU
⚠️ BOJ STANCE IS TO LET MARKET FORCES SET LONG-TERM RATES, GOVERNOR SAYS Full Story → https://t.co/MFj49n66Ub https://t.co/hTG7zfzzpP
BOJ GOVERNOR UEDA: NOT CONSIDERING ISSUING CBDC WITH NEGATIVE RATE
Bank of Japan Governor Haruhiko Kuroda is prepared to take action if bond yields see a significant increase, signaling readiness to intervene in markets.
BOJ GOVERNOR UEDA TO BE RESPONSIVE IN CASE OF SIGNIFICANT YIELD INCREASE
BOJ GOVERNOR UEDA: MARKET IN PRINCIPLE DETERMINES LONG-TERM YIELDS
Bank of Japan Governor Ueda says if inflation moves as expected, will adjsut policy https://t.co/1NeF1zL3KP
BOJ GOVERNOR UEDA: MONETARY POLICY UNAFFECTED BY GOVERNMENT FINANCE CONSIDERATIONS
BOJ GOVERNOR UEDA TO ADJUST EASING IF PRICE TREND RISES
BoJ Executive Director Kato: Bank has no plan to immediately unload its holdings of ETFs https://t.co/dnRfVQ9AzS
The yawning interest-rate gap between Japan and the U.S. has pushed the yen down against major currencies, spurring Japanese intervention to defend its exchange rate. The sinking yen has been a boon for Japan’s tourism and exports but has raised the costs of imports, hurting GDP.…
Since December 2019 - so just before COVID - the Yen is the weakest currency in real effective terms except for the Egyptian Pound. The world's strongest currency over this time period is the Argentinian Peso, which makes just as little sense and means Argentina won't grow... https://t.co/eUsVkRv9X8
Image is Japanese Yen vs Mexican Peso. Yen has weakened consistently for four years. Can this trend continue? https://t.co/1LZtD1fLMB