By Leika Kihara
WASHINGTON (Reuters) -Bank of Japan Governor Haruhiko Kuroda said on Wednesday fast and one-sided moves in the yen, driven by speculation, would be bad for the economy by making it difficult for firms to set business plans.
“Yen depreciation may have good impact on the macro-economy as a whole, but there are some sectors which are suffering” from the weak yen, Kuroda said at an annual meeting of the Institute of International Finance.
“We have to be carefully watching and analysing the impact of currency movements on the economy including on various sectors,” he said.
Kuroda, who is visiting Washington to attend the G20 and International Monetary Fund (IMF) meetings, came as the dollar hit a fresh 24-year high of 146.80 yen on Wednesday after the release of U.S. producer price data that was stronger than expected.
Japan intervened in the currency market last month to arrest sharp yen falls, driven largely by the policy divergence between aggressive U.S. interest rate hikes and the BOJ’s resolve to keep monetary policy ultra-loose.
Kuroda reiterated the BOJ’s commitment to keep interest rates ultra-low, arguing that the economy has yet to recover pre-pandemic levels and inflation remained modest compared with Western economies.
While saying he was hopeful that inflation will stably rise toward 2% in coming years, Kuroda said the BOJ must be cautious in withdrawing stimulus too soon.
“Wages are certainly rising now but insufficient to guarantee 2% inflation in a sustainable and stable manner,” Kuroda said.
“You cannot simply jump to the conclusion that we will be able to achieve 2% inflation in two years, or one year’s time, so that we can change monetary policy now. That is not correct,” he said.
(Reporting by Leika Kihara; Editing by Chizu Nomiyama)
