Bank of Japan Governor Haruhiko Kuroda said that rapid yen moves are undesirable after a meeting with Japanese Prime Minister Fumio Kishida yesterday, joining a chorus of policymakers lobbing verbal warnings over the currency’s recent sharp drop to 24-year lows.
“Sharp currency moves are undesirable as they destabilize corporate business plans and heighten uncertainty,” Kuroda told reporters after the meeting, which he described as an occasional catch-up by the two sides to discuss broad economic and financial matters.
“When the yen is moving 2 to 3 yen per day, that’s a rapid move,” he added.
Photo: Bloomberg
The dollar jumped more than ¥2 on both Tuesday and Wednesday of this week, reaching ¥144.99 per US dollar — its highest since August 1998 — before stabilizing.
Kuroda’s remarks helped to knock the dollar to its biggest one-day drop against the yen in a month, although the US currency also retreated against other major currencies after a feverish climb in the dollar index to a 20-year high.
Japan’s currency is particularly vulnerable, while the Bank of Japan sticks to its policy of near-zero interest rates, focused on bolstering the economy while the central banks of other major developed economies hike rates to rein in inflation.
Verbal sabre-rattling is seen as one of the few viable near-term options for Japan to counter the yen’s marked weakness, which is boosting the cost of fuel and other vital imports.
“We will watch exchange rate moves carefully,” Kuroda told reporters after his meeting with Kishida.
While he discussed market developments including currency moves with the premier, he did not receive any specific policy requests, he said.
“By summoning Kuroda, the premier wanted to deliver a message that he is concerned about sharp yen falls,” said Makoto Noji, chief foreign exchange strategist at SMBC Nikko Securities.
“Both know all too well that the weak yen stemmed from broad dollar gains, which no one can resist,” he said. “While maintaining a fighting stance, Japan has no choice but to wait until the US tightening cycle comes to a halt, once it has cooled down the economy.”
The US dollar fell to ¥143.10 following Kuroda’s remarks, and extended that drop as far as ¥142.43. It was last down about 1 percent at ¥142.60.
“Kuroda’s remarks somewhat triggered the decline, which I suspect were likely caused by repositioning among retail foreign exchange investors and rebalancing of pension funds such as GPIF,” Noji added, referring to Japan’s Government Pension Investment Fund.
Prior to Kuroda’s remarks, Japanese Finance Minister Shunichi Suzuki on Friday said that the government would not rule out any options on foreign exchange moves, repeating a warning on Thursday by Japanese Vice Minister of Finance for International Masato Kanda, the country’s top currency diplomat.
“We’ve seen a rapid heightening of market volatility against the background of speculative moves,” Suzuki told reporters, adding that authorities were “very concerned.”
ELECTRONICS BOOST: A predicted surge in exports would likely be driven by ICT products, exports of which have soared 84.7 percent from a year earlier, DBS said DBS Bank Ltd (星展銀行) yesterday raised its GDP growth forecast for Taiwan this year to 4 percent from 3 percent, citing robust demand for artificial intelligence (AI)-related exports and accelerated shipment activity, which are expected to offset potential headwinds from US tariffs. “Our GDP growth forecast for 2025 is revised up to 4 percent from 3 percent to reflect front-loaded exports and strong AI demand,” Singapore-based DBS senior economist Ma Tieying (馬鐵英) said in an online briefing. Taiwan’s second-quarter performance beat expectations, with GDP growth likely surpassing 5 percent, driven by a 34.1 percent year-on-year increase in exports, Ma said, citing government
‘REMARKABLE SHOWING’: The economy likely grew 5 percent in the first half of the year, although it would likely taper off significantly, TIER economist Gordon Sun said The Taiwan Institute of Economic Research (TIER) yesterday raised Taiwan’s GDP growth forecast for this year to 3.02 percent, citing robust export-driven expansion in the first half that is likely to give way to a notable slowdown later in the year as the front-loading of global shipments fades. The revised projection marks an upward adjustment of 0.11 percentage points from April’s estimate, driven by a surge in exports and corporate inventory buildup ahead of possible US tariff hikes, TIER economist Gordon Sun (孫明德) told a news conference in Taipei. Taiwan’s economy likely grew more than 5 percent in the first six months
SMART MANUFACTURING: The company aims to have its production close to the market end, but attracting investment is still a challenge, the firm’s president said Delta Electronics Inc (台達電) yesterday said its long-term global production plan would stay unchanged amid geopolitical and tariff policy uncertainties, citing its diversified global deployment. With operations in Taiwan, Thailand, China, India, Europe and the US, Delta follows a “produce at the market end” strategy and bases its production on customer demand, with major site plans unchanged, Delta president Simon Chang (張訓海) said on the sidelines of a company event yesterday. Thailand would remain Delta’s second headquarters, as stated in its first-quarter earnings conference, with its plant there adopting a full smart manufacturing system, Chang said. Thailand is the firm’s second-largest overseas
SUPPLY RESILIENCE: The extra expense would be worth it, as the US firm is diversifying chip sourcing to avert disruptions similar to the one during the pandemic, the CEO said Advanced Micro Devices Inc (AMD) chief executive officer Lisa Su (蘇姿丰) on Wednesday said that the chips her company gets from supplier Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) would cost more when they are produced in TSMC’s Arizona facilities. Compared with similar parts from factories in Taiwan, the US chips would be “more than 5 percent, but less than 20 percent” in terms of higher costs, she said at an artificial intelligence (AI) event in Washington. AMD expects its first chips from TSMC’s Arizona facilities by the end of the year, Su said. The extra expense is worth it, because the company is