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MNI INTERVIEW: Yen May Be Nearing End Of Depreciation-Hayakawa

(MNI) Tokyo

The BOJ's defence of its current yield targets is costly and counter-productive, one its former chief economists tells MNI.

The yen’s recent depreciation may have passed its most acute phase, but the Bank of Japan should act to curtail further weakness or risk setting the stage for a dangerous sudden rise in the currency once the Federal Reserve moves away from its current tightening stance, a former BOJ executive director told MNI.

While the yen is trading weaker than 130 to the dollar and its real effective exchange rate is now the lowest in 50 years, driven by a widening U.S.-Japan yield gap, it may not fall as far as 140, Hideo Hayakawa, also a former BOJ chief economist and now senior fellow at the Tokyo Foundation for Policy Research, told MNI on Monday.

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The yen’s recent depreciation may have passed its most acute phase, but the Bank of Japan should act to curtail further weakness or risk setting the stage for a dangerous sudden rise in the currency once the Federal Reserve moves away from its current tightening stance, a former BOJ executive director told MNI.

While the yen is trading weaker than 130 to the dollar and its real effective exchange rate is now the lowest in 50 years, driven by a widening U.S.-Japan yield gap, it may not fall as far as 140, Hideo Hayakawa, also a former BOJ chief economist and now senior fellow at the Tokyo Foundation for Policy Research, told MNI on Monday.

Keep reading...Show less