Sudden moves in Japan’s currency hurt companies and households, and that impact requires close government scrutiny, newly appointed Japanese Minister of Finance Katsunobu Kato said in a group interview yesterday, following a pronounced slide in the yen in recent days.
“The problem is sharp currency fluctuations can have a negative impact on business activity and does not help citizens’ lives,” he said.
He also called for clear central bank communication and said that the government would quickly put together an economic package.
Photo: Kosuke Okahara, Bloomberg
Japan’s currency is trading at about ¥148.40 against the US dollar compared with a high of 141.66 just a week ago, as investors try to determine the direction of Ishiba’s new administration.
Strong US jobs data on Friday gave the currency an additional shunt as market players lowered their expectations for the size of US Federal Reserve interest rate cuts.
“We will carefully watch the impact of [foreign exchange reserves] forex moves on the Japanese economy and people’s lives,” Kato said.
Japan has already spent more than US$100 billion this year propping up the yen and would likely want to avoid having to intervene in markets again if possible.
Kato did not specify what action the government might take if the yen weakens further.
The Japan leadership race and comments from the new government have contributed to recent volatility in the yen.
Japan’s economy was not ready for higher interest rates, Ishiba said last week, prompting the currency to fall. Later he appeared to walk back some of those comments, suggesting he is still in the process of judging how best to communicate with markets.
Kato said he expects the Bank of Japan (BOJ) to communicate carefully with the market and manage policy appropriately toward its price goal.
The government and the central bank last week confirmed a joint accord that states their commitment to a 2 percent inflation target.
A BOJ rate hike at the end of July caught out some market participants and was seen contributing to a market meltdown that resulted in Japan’s worst-ever daily slide in stock prices. The bank meets at the end of this month and is widely expected to keep rates unchanged.
The specifics of monetary policy should be left to the central bank, Kato said.
To protect households from the impact of higher prices and to support growth, Ishiba last week ordered a package of economic measures and a supplementary budget to help fund it. The upcoming package is to include cash handouts for low-income households and regional economies.
“We want to put this together as soon as possible and take more concrete steps,” Kato said.
The additional spending would likely add to Japan’s debt burden, further straining the country’s already tough fiscal situation.
Japan’s debt reached 255 percent of GDP this year, the International Monetary Fund said.
Kato said that the government has to keep next year’s primary balance and fiscal health goal in mind while working on spending reform.
The government would continue to strengthen the competitiveness of the semiconductor industry, he added.
“The government’s stance has been [that] the chips sector is of key importance for economic national security,” Kato said. “We will keep following through on plans to support it.”
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary