Japanese yen weakens: Finance Minister confirms market monitoring and dialogue with Washington
Japanese Finance Minister Satsuki Katayama the government's growing concern over the sharp fluctuations in foreign exchange markets, stating in her address to parliament that authorities are closely monitoring the recent decline in the value of the Japanese yen. These remarks come at a sensitive time as the Japanese economy faces challenges in balancing economic growth with price stability.
Concerns about the impact of import costs on wages
In response to parliamentary inquiries about the potential economic repercussions, specifically whether the depreciation of the national currency might hinder real wage growth due to increased import costs, Minister Katayama clarified the government's position, stating, "We are closely monitoring recent developments, as reported by Western media outlets." This statement reflects concerns that a weaker yen could lead to imported inflation that erodes wage increases, thereby weakening the purchasing power of Japanese households.
Close coordination with the United States
In the context of international relations and monetary policy, the minister emphasized that the Japanese government maintains very open and close channels of communication with the United States. She added, "We will continue the dialogue to ensure that the concerns raised regarding the impact of the exchange rate do not materialize." Economic analysts point out that this coordination is essential to avoid any misunderstandings that might arise from potential interventions in the currency market and to ensure the stability of global financial markets.
Economic background and current exchange rate
This development comes as the US dollar remains stable against the Japanese yen, holding at a high of 155.99 yen at the start of trading on Friday. Experts attribute this continued pressure on the yen to the significant interest rate differential between the Bank of Japan, which has adopted a highly accommodative monetary policy, and the US Federal Reserve, which has kept interest rates high for an extended period.
It should be noted that the continued weakness of the yen is a double-edged sword for the Japanese economy; on the one hand, it boosts the profits of major exporting companies when they transfer their earnings from abroad, but on the other hand, it raises the energy and food bill for the country, which is heavily dependent on imports, thus putting Tokyo’s fiscal and monetary policymakers to a difficult test in balancing these contradictions.
