A day after meeting with Prime Minister Fumio Kishida, Bank of Japan Governor Kazuo Ueda strengthened his language in response to the weakness of the yen and sent out to financial markets on potential policy measures.FreemobilecryptogamesA clear warning.
In response to a question raised by parliament on Wednesday, Kazuo Ueda said that "the foreign exchange rate has a significant impact on the economy and inflation." based on these developments, [the central bank] may need to take monetary policy measures.
Kazuo Ueda also said he needed to pay attention to the fact that a weak yen would be more likely to affect inflation as Japanese companies increasingly tend to pass on rising costs to consumers through higher prices.
Shortly after Kazuo Inada spoke, the yen fell to 155 against the dollar on WednesdayFreemobilecryptogamesThe intraday low of .27 highlights that authorities may have to act earlier to prevent the impact of last week's suspected intervention from unraveling.
Comments by the Japanese authorities last month were seen as so weak that currency traders continued to sell the yen aggressively and pushed the dollar against the yen at one point through 160, a 34-year record. Since then, the president seems to have begun to adjust the tone of his remarks about the yen.
Later on Tuesday, Kazuo Ueda made similar cautionary remarks after a meeting with Japanese Prime Minister Fumio Kishida, sparking speculation that Japan might take action at future policy meetings.
Japanese Finance Minister Suzuki Shunichi made similar remarks at the same parliamentary meeting, he said.FreemobilecryptogamesAlthough the weakness of the yen is mixed, now I am very worried about the negative impact of upward pressure on import prices.
Suzuki also said that dealing with soaring prices is "an extremely important policy issue" for officials. "as Japan relies on overseas markets for food and energy and most transactions are denominated in dollars, a weaker yen may raise the price of imported goods," Suzuki said. "
At a time when senior financial authorities are working together, the government is suspected of intervening in the market twice last week to support the yen, after Mr Ueda gave no strong hint of concern about the yen at a post-meeting news conference on April 26.
Kazuo Ida's conversation with Kishida on Tuesday comes just seven weeks after their discussion on March 19, an unusual frequency that highlights the growing concerns of Japanese leaders.
As the yen has largely shrugged off last week's suspected intervention, some BoJ observers believe the BoJ's position is changing. The Bank of Japan raised interest rates in March for the first time since 2007, but has since faced a more difficult decision to raise interest rates later, given the sluggish economic recovery.
Kazuo Ueda said: "the Bank of Japan is closely watching the impact of the recent weakness in the yen on policy implementation."