Japanese Prime Minister Sanae Takaichi has talked up the benefits of a weaker yen in a campaign speech, adopting a tone at odds with her finance ministry, which has refused to rule out any options to counter excessive foreign exchange volatility.
Takaichi later softened her stance, saying she did not have a preference for the yen’s direction.
“People say the weak yen is bad right now, but for export industries, it’s a major opportunity,” Takaichi said on Saturday at a rally for Liberal Democratic Party candidate Daishiro Yamagiwa in Kanagawa Prefecture ahead of a snap election on Sunday.
Photo: Jiji Press via AFP
“Whether it’s selling food or automobiles, even though there were US tariffs, the weaker yen has served as a buffer. That has helped us tremendously,” she said.
Takaichi also expressed a desire to build an economic structure resilient to currency fluctuation by boosting domestic investment.
The yen has hovered at 18-month lows against the US dollar, contributing to inflation that has raised the prospect of interest rate hikes by the central bank.
Japanese Minister of Finance Satsuki Katayama has repeatedly said her ministry would take action to support the currency when necessary, which analysts and traders have widely interpreted as market intervention.
Takaichi yesterday wrote on X that she did not favor a specific yen direction.
“I did not say which is better or worse — a strong yen or a weak yen,” Takaichi said.
The government is monitoring financial markets and, as prime minister, she would refrain from commenting specifically on the matter, she added.
“My intention was solely to state that we aim to build an economic structure that is resilient to exchange-rate fluctuation, and not, as some reports have suggested, to emphasize the benefits of a weak yen,” she said.
“That said, a rapid yen appreciation in the past led to hollowing out of the domestic industry, which became a serious issue,” she said.
While the weak yen can lead to higher import prices, impacting people’s lives and businesses, it can also boost domestic investments, exports and overseas income, Takaichi said.
Former prime minister and finance minister Yoshihiko Noda, who coheads the largest — and newly created — opposition party, the Centrist Reform Alliance, said a weak yen hurts households, the Nikkei reported yesterday.
“No one feels pleased while looking at their household budget amid an excessive weakening of the yen,” the newspaper quoted Noda as saying. “The perspective of ordinary people is missing, which has made me concerned once again.”
The yen spiked after reports that the New York Federal Reserve had joined the Japanese authorities in asking banks about exchange rates for yen purchases — queries that market participants often interpret as readiness to intervene.
The yen’s protracted decline and a recent surge in Japanese government bond yields to record highs reflect investor concern about Japan’s strained finances.
However, Takaichi told Saturday’s rally that the nation’s Foreign Exchange Fund Special Account — established by the government for use in cases including currency intervention — has also benefited from the weak yen.
The account balance was at about ￥187 trillion (US$1.21 trillion) as of March last year, Japanese Ministry of Finance data showed.
Additional reporting by Bloomberg
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