The IMF said that it sees no factors that would compel Japan to intervene in the foreign exchange market to support the yen.
“We don’t see any conditions,” Sanjaya Panth, deputy director for the IMF’s Asia and Pacific Department, told reporters on Saturday at the annual gathering of the IMF and World Bank in Marrakesh, Morocco. Pantha cautioned that he was not speaking on behalf of the Japanese authorities, who he said “may know things I don’t” about the situation.
Panth said the yen’s depreciation has been mostly driven by interest rate differentials, reflecting economic fundamentals as inflation rises elsewhere while the Bank of Japan (BOJ) sticks with its ultra-loose policy to generate stable inflation.
Photo: Reuters
The IMF is not seeing key criteria that would support a need for intervention, namely dysfunction of markets, financial stability risks or de-anchoring of inflation expectations, he said.
Whether Japan would intervene to support the yen has been a key focal point lately, with the currency staying near ¥150 per US dollar.
Panth’s remarks come a day after Japan’s top currency official sent a warning to traders, directly hinting at the possibility of intervention by G20 counterparts if the yen moves excessively.
The veteran IMF official refrained from forecasting the timing for the end of negative interest rate and a yield curve control. There are both upside and downside risks for Japan ranging from inflation expectations to the outlook of the global economy, Panth said.
BOJ watchers are seeking clues to whether the bank would adjust its policy on Oct. 31, with a widely expected upgrade in inflation outlook. Concerns over inflationary pressures have grown in global financial markets in the wake of a war between Israel and Hamas, which has been seen as a potential threat to oil markets if the conflict spreads through the region.
“We’re still talking about two more weeks, three more weeks, a lot of things are happening in the world,” before the next BOJ meeting, Panth said. “I’m not going to try to predict what the Japanese authorities are going to do, except to say that I’m quite confident that they’ll look at it very carefully and make the right call.”
Some economists are now paying more attention to the IMF’s view on BOJ policy. In July, IMF chief economist Pierre-Olivier Gourinchas said the BOJ should have moved away from the yield curve control a few days before the bank adjusted it in Governor Kazuo Ueda’s first surprise move.
The IMF has raised its forecasts for Japan’s price gains, projecting that inflation in the world’s third-largest economy would run much hotter than the BOJ’s 2 percent target over the next year.
Japan’s key inflation measure has stayed above the price goal for a 17th month. Since the latest quarterly outlook report in July, the yen has weakened and oil prices have risen, boosting market expectations for the central bank to raise its projection again.
“There’s much more scope now than there has been for a very, very long time in Japan that inflation is going to remain [at] 2 percent or the 2 percent target would be achieved,” Panth said. “The probability of that happening has certainly increased much more than in the past.”
The IMF now sees Japan’s consumer prices rising 3.2 percent this year and 2.9 percent next year, compared with 2.7 percent and 2.2 percent respectively, forecast in April.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such