Akira Amari, the Economy Minister of Japan told reporters today that the major currency of country, Yen is still correcting from excessive appreciation. Incidentally, only 2 days earlier, Amari flagged the danger of Yen’s exchange rate getting to a very weak zone. Amari said that a Yen weaker than 100 to the USD will raise the import prices and hence, the livelihoods of common people will be impacted. The comment made by Amari 2 days earlier made many anxious that such verbal intervention may have an effect on the foreign exchange market and hence the new Government of this country played its part in clearing the stance when it comes to Yen. Incidentally, the comment made by Amari on 15th January resulted into a 2-day gain for Yen, as it jumped ahead by 1.2%. However, because of Amari’s latest comment on Yen’s correction after appreciation, the currency went down by 0.9% to 89.15 per USD.
Incidentally, on a quest to end the inflation in the country, the Japanese administration has implemented a coordinated action with the Central Bank and so far, the plans have been successful. Yen has got down to 4.4% since 26th December, the day new Japanese Government took over. A cheap Yen helps the competitiveness of companies such as Panasonic and Nissan which have labored under exchange rate strength for years. Yen, incidentally, reached a post-war high in 2011.
According to the Strategist of Bank of Tokyo-Mitsubishi UFJ, Takahiro Sekido, this is exactly what many investors feared. He added that Abe has his agenda set at weakening the strong Yen and he will prompt many of his ministers to talk about Yen and thereby create volatility in the market. Sekido expects further comments to roil the currency in next week when the officials of Bank of Japan will meet and are expected to come up with an inflation target and policy agreement with Japanese Government.
Correcting his earlier remark, Amari said today that the press media didn’t report his entire remark causing a reaction in the foreign exchange market. The Finance Minister Taro Aso incidentally had made numerous remarks about the country’s economic policy and Yen’s value prior to taking office. Even the Prime Minister Shinzo Abe corrected himself after making comments that hinted that he had advance knowledge on the policy decision of the Central Bank of Japan.