On the 29 September broadcast of Ohayō Terachan, experts exchanged views on developments in Japan and the US concerning yen weakness and the outlook for exchange rates. Statements from the Japanese and US governments aimed at restraining yen weakness, the market response and the outlook were discussed.
As moves surrounding the yen against the dollar intensified in the FX market, a succession of statements aimed at restraining yen weakness came from within the Japanese and US governments, and the yen temporarily strengthened to the ¥156-per-dollar range. With the Bank of Japan's monetary policy meeting approaching, concern over currency intervention by the government and the Bank of Japan has also resurfaced.
At the Japan-US summit, President Trump expressed concern over yen weakness, while the Takaichi administration viewed yen undervaluation as a problem, spreading expectations in the market that efforts to correct yen weakness would continue. The program discussed the effects of interest-rate differentials and yen carry trades behind yen weakness and strength.
Tanaka (田中) pointed to the appropriateness of interest rates and their consistency with economic fundamentals, saying that irrational policy decisions would create uncertainty for the economy. The view was also expressed that external pressure and political developments could affect exchange rates.
Against a backdrop of rising uncertainty, views were expressed that statements and policy decisions from both Japan and the US would continue to affect exchange rates. Discussion is also expected to continue on the appropriate approach to domestic fiscal management.