Weakening Yen: Japan’s Takaichi & Economic Strategy

It is highly likely that the weakening trend of the Japanese yen will continue. This forecast is based on remarks by Japanese Prime Minister Sanae Takaichi.

Local media, including the Nihon Keizai Shimbun, reported on the 1st that Prime Minister Takaichi emphasized only the advantages of the weak yen while campaigning in Kawasaki City, Kanagawa Prefecture, near Tokyo, on the 31st of last month and did not mention disadvantages such as rising import prices.

In a street speech in Kawasaki City the previous day, Prime Minister Takaichi said, “They say it’s bad because the yen is low, but it’s a big opportunity for the export industry. The operation of special accounting for foreign exchange funds is also in a state of gloating.”

The Foreign Exchange Fund Special Account is a special account in which the Japanese Ministry of Finance manages funds for market intervention in the event of sudden exchange rate fluctuations, and plays a similar role to Korea’s Foreign Exchange Equalization Fund.

He pointed out that the yen was high during the past Democratic Party administration and said, “I don’t know whether the high yen is good or the low yen is good,” and added, “If the yen is high, even if we export, we are not competitive.”

Since Prime Minister Takaichi took office, the yen-dollar exchange rate has risen and the value of the yen has fallen, and his proactive fiscal policy has been pointed out as a major factor. This is becoming an excuse for the opposition party to attack.

Kyodo News reported that Yoshihiko Noda, co-chair of the largest opposition party, the Center for Reform Alliance, criticized at a rally in Saitama Prefecture on the same day, saying, “Import prices will rise further due to the low yen, but nothing is being done.”

Reporter Lee Gyu-hwa david@dt.co.kr