Japanese Finance Minister Hirohisa Fujii yesterday raised the prospect of currency market intervention for the first time in a scramble to limit the damage from a yen rally fueled by earlier comments that he favored a strong currency.
The yen hit an eight-month high of ¥88.22 to the dollar on Monday after Fujii, who has been on the job for two weeks, repeatedly said that he wanted to avoid intervention and that a strong yen would eventually support domestic demand.
It has since pulled back to around ¥90, giving up all of the previous day’s gains, as Fujii backpedaled on his remarks.
Domestic demand is collapsing in the world’s second-largest economy, pushing the country into its deepest deflation on record last month.
A strong yen puts downward pressure on import prices in a country where deflation is already at record levels, although policymakers and businesses tend to worry more about the impact it has on exports, the key driver of the country’s growth.
The country’s key consumer price index, which excludes volatile fresh food prices, fell 2.4 percent from a year earlier amid rising unemployment and falling wages, the government said yesterday. The figure marks the steepest decline since officials began compiling comparable data in 1971.
Core CPI has now dropped for six straight months and suggests that Japan could face another bout of prolonged deflation.
Fujii reiterated yesterday that global competition to devalue currencies was wrong, but that this didn’t mean Tokyo would leave excessive yen rises unattended.
“If moves are irregular, there is a possibility we might take whatever action deemed necessary for the sake of the country,” Fujii told a news conference after a Cabinet meeting.
He said that his message had been consistent, but that it was being misinterpreted by markets.
“I never said a word about leaving a strong yen as it is. I’m saying it’s wrong, as history shows, for countries to continuously take policies aimed at lowering the value of their currencies,” Fujii said.
This month, the yen has neared January’s 13-year high of ¥87.10 per dollar as the US currency has fallen to its lowest in a year against the likes of the euro and Australian dollar.
While the dollar has been pressured in part by ultra-low interest rates and lost about 3 percent on the yen this month, the Japanese currency has only gained about 1 percent on the euro and none at all against the Australian dollar as investors have resumed buying of higher-yielding assets, including currencies.
Analysts, however, were unconvinced, saying market forces had led Fujii to beat a retreat from his previous comments.
“Fujii appears to have been jolted by the yen’s rapid appreciation and is worried that the strong yen would throw cold water on the economic recovery led by exports,” said Takumi Tsunoda, an economist at Shinkin Central Bank Research Institute. “But it is unlikely the government actually will intervene in the market.”
The yen has strengthened steadily from about ¥93.00 to the dollar at the start of this month as Fujii said he did not see a need to weaken the Japanese unit for the sake of the country’s exporters and that a strong currency also had benefits.
The US dollar yesterday briefly climbed back above ¥90, reflecting Fujii’s repeated warnings that currency moves were getting too one-sided toward yen rises.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS