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By Tetsushi Kajimoto
TOKYO (Reuters) -Forex stability is “crucial” and Japan’s authorities will scrutinise the financial influence from the yen’s current decline, Finance Minister Shunichi Suzuki mentioned on Friday.
The greenback rose to a near-three-year excessive towards the yen at 113.885 yen on Friday earlier than the minister’s feedback, partly on expectations inflation dangers may prod the U.S. Federal Reserve to boost rates of interest before anticipated. It remained close to that degree in early afternoon buying and selling.
“Stability in currencies is essential,” Suzuki informed a information convention. “We’ll proceed to carefully watch foreign money market strikes and their influence on the economic system.”
Whereas a weak yen pushes up import prices for some companies and shoppers, it helps exporters, he mentioned.
Japan’s wholesale inflation hit a 13-year excessive in September as rising international commodity costs and a weak yen pushed up import prices, placing strain on company margins and elevating the danger of undesirable client worth hikes.
“I used to be a bit stunned on the minister’s comment, which gave an impression that he was involved a few weak yen,” mentioned Masafumi Yamamoto, chief foreign exchange strategist at Mizuho Securities.
“He in all probability needed to sign a message {that a} weak yen would not make all the things rosy as he wanted to point out a sympathy in the direction of shoppers dealing with greater import prices forward of elections.”
That mentioned, nobody available in the market anticipated the federal government to answer the yen strikes at this stage through measures equivalent to intervening by way of yen-buying, he added.
Economic system Minister Daishiro Yamagiwa mentioned “there is no doubt” {that a} weak yen would have an effect on resource-deficient Japan’s economic system because it drives up the price of power.
He declined to remark additional, saying that commenting on currencies in his capability may “trigger issues”.
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