Japan should take action against 'excessive one-sided' yen movements, official says

Japan should take action against ‘excessive one-sided’ yen movements, official says

The Japanese yen banknote is seen in this illustration taken June 1, 2017. REUTERS/Thomas White/Illustration/File Photo

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  • Rate policy falls under the jurisdiction of the Bank of Japan – Kihara
  • Japan ready to loosen border controls soon – Kihara
  • Adds weak yen ‘most effective’ to boost inbound tourism
  • Do not rule out issuing debt to finance rising defense spending – Kihara

TOKYO, Sept 11 (Reuters) – The Japanese government must take the necessary steps to stop the yen from falling too much, Deputy Chief Cabinet Secretary Seiji Kihara said on Sunday, echoing warnings from the authorities that the currency would fall to a 24-year low.

“With regard to excessive unilateral currency movements, we will be closely monitoring developments and must take the necessary measures,” Kihara said on a television program when asked about the recent fall in the yen.

The yen recently fell to a 24-year low against the dollar as investors focused on the widening divergence between the US Federal Reserve’s aggressive rate hike and the Bank of Japan’s (BOJ) pledge to maintain ultra-low rates.

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“I will not comment on monetary policy and interest rate policy as they fall under the jurisdiction of the Bank of Japan,” Kihara said.

Kihara also said the government would consider “in the not so distant future” steps to further open Japan’s borders to foreign visitors, such as lifting the cap on the daily number of entrants.

“A weak yen is most effective in attracting inbound tourism,” Kihara said, adding that further steps need to be taken to attract more foreign tourists to the country.

Japan eased border controls effective Sept. 7, raising the ceiling for daily entries to 50,000 and freeing entry for unguided package travelers. read more

Analysts say lifting the ceiling and allowing more travelers will be critical to attracting foreign money to Japan and revitalizing its fragile economy.

Regarding how to finance Japan’s expected increase in defense spending, Kihara said he did not rule out issuing public debt.

“Our goal is to sharply strengthen the defense of Japan through various sources of income. We will be flexible with funding and will not rule out any options,” he said.

In a political roadmap released in June, the government said it wanted to dramatically increase defense spending “over the next five years,” highlighting Tokyo’s interest in beefing up defense at a time of tension with its powerful neighbor China. read more

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Reporting by Leika Kihara; Editing by Cynthia Osterman

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