“BoJ easing and FX intervention are not contradictory”

TOKYO: Japan’s Finance Minister Shunichi Suzuki said there was no political contradiction between the Finance Ministry’s buying of yen to prop up the currency and the Bank of Japan’s (BoJ) printing money ) to maintain its ultra-accommodative monetary policy.

“Monetary easing aimed at sustained and stable price increases, including wage growth, and monetary intervention in response to excessive market movements, are different in terms of policy objectives and are therefore not contradictory. “Suzuki said.

He added that the central bank’s policy aims to ensure price stability and not to target currencies.

Suzuki made the remarks at a press conference when asked if the BoJ’s monetary easing could cause the yen to weaken excessively and if the policy mix between the government and the central bank was having the intended effects. .

The BoJ is expected to keep interest rates ultra-low at its two-day policy meeting ending Friday to support the fragile economy, even at the cost of accelerating an unwelcome drop in the yen to new lows of 32. year.

Policymakers have repeatedly expressed concerns about the impact of a weak yen on the cost of living.

And investors see the BoJ as an exception for chasing ultra-low rates as central banks elsewhere hiked rates to fight soaring inflation.

Japan engaged in yen-buying interventions in the foreign exchange market to defend the yen against sharp declines, which were driven in part by the widening gap between Japanese and US interest rates.

Japanese authorities are in constant contact with their American counterparts and stand ready to take appropriate measures in the currency market against volatile movements in the yen, according to Suzuki.

The finance minister reiterated that the government would not tolerate excessively volatile yen movements driven by speculative transactions.

“If we leave highly volatile currency movements, driven by speculative trading, unwatched, it would affect businesses and households,” he said.

Japan’s intervention to buy yen is aimed at mitigating market volatility, signaling that Tokyo was not targeting a specific currency level to decide when to enter the market to buy yen.

Japanese authorities are in constant contact with their US counterparts and stand ready to take appropriate action in the currency market against volatile movements in the yen, Suzuki said. —Reuters