A senior International Monetary Fund official said on Friday that the yen is broadly in line with Japan’s medium-term fundamentals, and urged the country to focus on efforts to improve its competitiveness and growth potential.
David Lipton, the first deputy managing director of the IMF, told Reuters in an interview that the Fund’s main concern is whether Japan could forcefully implement structural reforms to shore up its sliding potential growth and export competitiveness.
Lipton was in Tokyo for consultations with Japanese officials ahead of the release of the IMF’s annual report on the world’s third-largest economy.
“If anything, we’ve been seeing Japan experiencing slower export growth than Japan had expected and we had expected,” Lipton told Reuters.
“There’s a need for Japan to strengthen its competitiveness. So we don’t believe that strengthening of the yen at this point would be helpful because that would go in an opposite direction from that important need.”
The principle pathway for improving Japan’s competitiveness isn’t about the currency but the so-called “Third Arrow of Abenomics”, he added, referring to the third phase of Prime Minister Shinzo Abe’s economic turnaround plan.