MNI BRIEF: BOJ's Kuroda Says Weaker Yen A Net Positive

Bank of Japan Governor Haruhiko Kuroda in remarks on Thursday said that a weaker yen is a net positive as it boosts earnings from overseas, but is balanced against higher imported input costs for companies.

“The weak yen basically has a net positive impact on Japan’s economy," Kuroda said in rare, detailed remarks on the exchange rate.

"However, The depreciation has both positive and negative effects, and due attention should be paid to the fact that its effects will materialise in various ways depending on economic entities' business activities and their breakdown of spending.”

He noted that stable foreign exchange rates play an important role in lowering uncertainties over the business environment and can flow through to consumer spending, but are not a direct focus of monetary policy, see: MNI STATE OF PLAY: BOJ Stays Covid Easy As Policy Lags Big CBs.

“Monetary policy does not directly target exchange rates, but indirectly affects them through, for example, changes in yield differentials between countries,” he added and said, "fluctuations in foreign exchange rates bring about changes in relative prices of goods and services across trading partners, and thereby have a significant impact on various corporate decisions.”

“Therefore, exchange rates should move in a stable manner that reflects economic and financial fundamentals,” he said.