BOJ governor affirms monetary policy while concerns loom over a weak yen

Governor Kazuo Ueda of the Bank of Japan (BOJ) assured that the central bank would not adjust its policy directly in response to currency fluctuations, while concerns continue to grow over the yen's weakness.

Bloomberg News reported that Ueda's remarks come as market participants anticipate US inflation data that could possibly trigger further depreciation of the yen, prompting intervention from Japan's government.

Despite the yen hovering near a 34-year low against the dollar, Ueda said ,"We won’t consider changing monetary policy at all to directly respond to moves in foreign exchange."

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While saying that the BOJ will continue to monitor the impact of the weak yen on the economy and inflation dynamics, Ueda noted the central bank's vigilance regarding currency movements.

However, he clarified that any adjustments to monetary policy would be made with a broader economic perspective in mind.

The BOJ's cautious approach is indicative of the complexities surrounding currency interventions and the need to balance various economic factors.

While there are constant concerns over the yen's depreciation, Ueda said that currency interventions will fall under the purview of Japan's Ministry of Finance.

Analysts speculate that continued yen weakness could prompt the BOJ to consider early rate hikes, especially if ministry interventions fail to influence market sentiment.

Recent warnings from Japanese currency authorities against speculative trading mark repeated attempts by the government to stabilise the currency markets.

During a parliamentary session, Ueda said that financial and currency markets will have to be monitored.

(With inputs from Bloomberg)