Yen ‘Sharp’ Fall
Credit by www.japantimes.co.jp

The yen has recently plummeted down against the American dollar, and the situation is definitely bad for the country. Japanese policymakers have escalated their concerns and warnings against the sharp fall of yen. This is the worst economic condition happening to the country after two decades against (American) dollar. This condition would definitely damage the country’s economy since it would increase the living cost while wage growth is still sluggishly low.

 Yen ‘Sharp’ Fall
Credit by pexels.com

Haruhiko Kuroda, the Governor of Bank of Japan, considered advocacy concerning the weaker currency. He mentioned the effect of sharp yen decline that will hurt the country’s economy. It will cause firms to have difficulty when making business plans.

Finance Minister Move

Shunichi Suzuki, Japanese Finance Minister, has recently stated that the recent fall in their yen is sharp. He had made an ‘appointment’ with their American counterpart to discuss about the currency moves. This lowest economy condition of Japan is being worsened as the central bank moves on defending its (extremely low) rate policy. It’s in contract with the aggressive rate increase by American Federal Reserve.

Suzuki told the media that their government has agreed that the fast currency move has been negative and undesirable. What happens to yen has been quick, so they are monitoring the condition closely – and there is a sense of urgency with it.

Suzuki also stated that he hadn’t said his concern, related to yen moves, when meeting up with Janet Yellen, the US Treasury Secretary. However, he had voiced the currency fast movement during his briefing on Japan’s economic state. He also confirmed that both countries’ currency authorities are going to have a close communication. They would align the principles of exchange rate that is agreed among G20 and G7 members. This is the confirmation provided by Suzuki to media after his meeting with Yellen on International Monetary Fund gatherings’ sidelines.

However, when media asked Suzuki concerning the possibility of Japan intervention within the currency market (to stop further fall of the yen), Suzuki declined to answer. He didn’t provide answers concerning the question about Yellen’s response related to his remarks.

The Current Condition

Yen has temporarily increased after Suzuki’s statement, but then it goes down again as the new day starts. During G7 statement, leaders have stated that they are monitoring the global markets carefully and closely. For them, the condition is still volatile, but they didn’t mention anything about the exchange rates. The markets have their attention lasered on the fact whether the US (and other GT advanced group) would nod to Japan’s concern of their yen movements, whether during the bilateral meeting between Yellen and Suzuki or in G7 statement.

Suzuki believed that the G7 may experience a ‘stuck’ moment. The group has agreed that it’s the market who determines the currency rates, which means that there is nothing that anyone can do to stop the plummeting of the yen. Investors alone believe that yen would continue falling, unless Japanese authorities would intervene in the situation. Unfortunately, they haven’t done anything and it is considered useless.

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