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"Various macro models suggest (the weak yen) is a plus to the
economy," as long as its moves are stable, Bank of Japan
Governor Haruhiko Kuroda told parliament on Wednesday,
reiterating his stance.
Finance Minister Shunichi Suzuki said in parliament that the
weak yen has both positives and negatives for the economy,
although it could be negative if wages remain stagnant, which
would mean potential harm to households because of higher costs
of living.
The yen weakened beyond 133 to the dollar <JPY=EBS> on Wednesday
and slumped to a seven-year trough below 143 against the euro ,
with an expected rate move by the European Central Bank likely
to leave Japan as the sole major central bank sticking to an
ultra-easy monetary policy in the face of surging inflation.
Speculation in financial markets has lingered that Japan may
somehow intervene to arrest the yen weakness, which is pushing
up import prices and households' cost of living, by intervening
to sell dollars - a switch from its traditional stance of trying
to weaken the yen.
Japan has not intervened in the currency markets since it sought
to tame a surge in the yen after a devasting earthquake and
tsunami in March 2011.
In the past, policymakers have preceded any action in currencies
by escalating their verbal warnings, which have drawn close
attention from the markets.
"There's no clear threshold as to when policymakers may escalate
warning against weak yen. They may wait until it tops 140 yen,"
said Daisuke Karakama, chief market economist at Mizuho Bank.
"With voters' support staying high, policymakers appear
complacent. Therefore they did not want Kuroda to say something
unnecessary to rock the boat."
Kuroda was on the defensive on Wednesday over a remark he made
earlier this week that Japanese households were becoming more
accepting of higher prices.
He retracted the comment in his appearance before parliament,
after drawing criticism for apparent insensitivity to the impact
of higher living costs for consumers.
"My expression that households are becoming more accepting of
price hikes was not appropriate at all, so I withdraw it," he
said.
"What's most important is for firms with better profits from the
weak yen to boost capital expenditures and raise wages, to drive
a positive cycle of greater incomes leading to more spending."
Kuroda said moves in the dollar may not be affected much by U.S.
rate hikes unless they are stronger than expected, according to
a recording of an online interview by the Financial Times.
(Reporting by Tetsushi Kajimoto and Daniel Leussink; Editing by
Jacqueline Wong, Edmund Klamann and Kim Coghill)
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