What's Behind the Decline in the Japanese Currency?
The Japanese yen continues to weaken, approaching 154.5 per US dollar, its lowest level in nine months. This weakening occurred as investors became more willing to take risks following hopes that the United States government would soon reopen. Consequently, demand for the yen as a safe haven currency declined.
Japanese Prime Minister Sanae Takaichi also signaled that her government would set new fiscal targets to allow for more flexible spending. This move reinforced expectations of a looser fiscal policy under the new administration. She even asked the Bank of Japan (BOJ) to be cautious in raising interest rates, although some policymakers want to accelerate the monetary tightening process.
Meanwhile, Japanese economic officials warned of the negative impact of a further weakening of the yen. Economic Revitalization Minister Minoru Kiuchi said that a weak yen could increase the prices of imported goods and put pressure on local consumers. The government now faces a dilemma: maintaining public purchasing power while continuing to stimulate economic growth through loose policies. (az)
Source: Newsmaker.id
