A senior International Monetary Fund (IMF) official said the recent depreciation of the yen was due to fundamentals and would not be a reason to change economic policies, including the central bank’s ultra-low interest rates.
The statement is an international agreement to intervene in the currency markets to stop further depreciation of the yen, as G7 and G20 countries agree that such actions are justified only if the exchange rates do not match the fundamentals. It highlights the difficulties that Tokyo may face if it seeks.
“So far, we’re looking at the yen because of fundamentals,” Sanjaya Belatthip, deputy director of the IMF’s Asia-Pacific Bureau, told Reuters late Wednesday.
“Economic policymaking should continue to look at fundamentals. There is no reason to change economic policy because what is happening now reflects fundamentals.”
In contrast to the increased likelihood of a positive rate hike by the Federal Reserve, the Bank of Japan continues to defend its ultra-low interest rate policy, with the yen against the dollar for the first time in 20 years. It plummeted to the lows.
“Currently, there is no chaotic market in the foreign exchange market. Mr Pans has been driven by fundamentals when asked if the yen-buying currency intervention by Japanese authorities is justified.” Stated.
Speculation that the market may act to resist further depreciation of the yen, perhaps by buying the yen, raising interest rates, or fine-tuning the BOJ’s dovish guidance on the future path of monetary policy. Is full of.
“As you know, the depreciation of the yen was not a bad thing for Japan,” Pans said. “At the same time, it affects the home. It’s a little mixed bag,” he said in an interview.
Inflationary pressures have subsided, and the Bank of Japan did not need to change its ultra-loose policy, Pans said.
Temporary factors, such as dissipating the effects of past mobile phone price cuts, could boost consumer price inflation, while Japan sustains inflation to the BOJ’s target of 2% in the short term. He added that it is unlikely to reach it.
“Japan is in a very different situation from other developed countries that have begun to tighten monetary policy,” he said. “I don’t think we need to change our stance on accommodative monetary policy.”