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MNI INSIGHT: Weak Economy Ties BOJ To Easy Policy As Yen Sinks

(MNI) Tokyo
TOKYO (MNI)

A weaker yen is eating into corporate profits, but there is little the BOJ can do about it.

The Bank of Japan is increasingly concerned that rapid yen depreciation will erode the confidence of firms and households, but the economy and outlook for inflation remain too weak for officials to consider moves away from easy policy which might bolster the currency, MNI understands.

The yen fell to 134 to the dollar on Wednesday, its weakest in more than two decades and compared to around 113 in January, increasing import costs and squeezing corporate profits. The JPY135.15 low from January 2002 is now in market sights. On Thursday, the yen traded around JPY134.36 and a morning high of JPY134.48.

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The Bank of Japan is increasingly concerned that rapid yen depreciation will erode the confidence of firms and households, but the economy and outlook for inflation remain too weak for officials to consider moves away from easy policy which might bolster the currency, MNI understands.

The yen fell to 134 to the dollar on Wednesday, its weakest in more than two decades and compared to around 113 in January, increasing import costs and squeezing corporate profits. The JPY135.15 low from January 2002 is now in market sights. On Thursday, the yen traded around JPY134.36 and a morning high of JPY134.48.

Keep reading...Show less