Japan’s Policy Makers are Keeping the Faith

Facing the prospect of the first growth-free fiscal year since the 2009 global recession, Japan’s policy makers are keeping faith that a weaker exchange rate will help the world’s third-largest economy.

While the yen’s 26 percent slide against the dollar in the past two years has yet to stoke the nation’s exports and production, Japan’s central bank and economy chiefs in the past week both signaled a green light to a further decline. Koichi Hamada, an adviser to Prime Minister Shinzo Abe, said in an interview that a weak yen “is a positive for Japan’s economy.”

The remarks underscore the chance of deeper depreciation as the U.S. Federal Reserve withdraws stimulus and Japan maintains it. The dynamic means the Bank of Japan will get additional help in maintaining inflation, at the cost of a deeper erosion in purchasing power for consumers hit by a higher sales tax.

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.