Japanese Policymakers Amari, Aso Weigh Impact of JPY Capitulation

Friday, 12/09/2014 | 00:05 GMT by Jeff Patterson
  • In light of JPY lows against the USD, Japanese Economics Minister Akira Amari and other policymakers have warned against upheavals
Japanese Policymakers Amari, Aso Weigh Impact of JPY Capitulation

In light of JPY multi-year lows against the USD, Japanese Economics Minister, Akira Amari, and other policymakers have warned against possible repercussions and upheavals, propagated by staunch declines of the JPY.

Indeed, Japanese investors and proponents of the economy currently face a good news bad news scenario – the good news is that Volatility is back in Forex markets, helping rekindle trading volumes across the retail and institutional sectors. Unfortunately, this news also has brought to light the economic ramifications of the rapid fluctuation, and steep fall of the JPY against the USD, now at the lowest level since October 2008.

According to Akira Amari, Japanese Economics Minister, in a recent statement on the bourgeoning situation, “Ultimately, while markets, not policymakers, determine yen levels, it was desirable for the Japanese currency to stabilize at levels that reflect economic fundamentals.” However, "It's's not good for Japan and the global economies for currencies to have big fluctuations, regardless of whether they move up or down.”

Gradual Moves ‘Desirable’

In addition, Japanese Finance Minister, Taro Aso, preached caution when weighing JPY exchange movements over short periods of time. According to Aso in a weekly cabinet brief, "I've been saying that rapid currency fluctuations are undesirable. Gradual moves are desirable. That's the basic thinking on currencies."

Unfortunately for Amari and Aso, as well as the Japanese economy – should these predictions prove true – the US Federal Reserve's expected rise of interest rates at a faster-than-anticipated pace might only add to the frenetic movement of the JPY against the USD.

Time will tell whether this trend will hold true, though exchange volatility could ultimately prove to be the catch-22 of the Japanese.

In light of JPY multi-year lows against the USD, Japanese Economics Minister, Akira Amari, and other policymakers have warned against possible repercussions and upheavals, propagated by staunch declines of the JPY.

Indeed, Japanese investors and proponents of the economy currently face a good news bad news scenario – the good news is that Volatility is back in Forex markets, helping rekindle trading volumes across the retail and institutional sectors. Unfortunately, this news also has brought to light the economic ramifications of the rapid fluctuation, and steep fall of the JPY against the USD, now at the lowest level since October 2008.

According to Akira Amari, Japanese Economics Minister, in a recent statement on the bourgeoning situation, “Ultimately, while markets, not policymakers, determine yen levels, it was desirable for the Japanese currency to stabilize at levels that reflect economic fundamentals.” However, "It's's not good for Japan and the global economies for currencies to have big fluctuations, regardless of whether they move up or down.”

Gradual Moves ‘Desirable’

In addition, Japanese Finance Minister, Taro Aso, preached caution when weighing JPY exchange movements over short periods of time. According to Aso in a weekly cabinet brief, "I've been saying that rapid currency fluctuations are undesirable. Gradual moves are desirable. That's the basic thinking on currencies."

Unfortunately for Amari and Aso, as well as the Japanese economy – should these predictions prove true – the US Federal Reserve's expected rise of interest rates at a faster-than-anticipated pace might only add to the frenetic movement of the JPY against the USD.

Time will tell whether this trend will hold true, though exchange volatility could ultimately prove to be the catch-22 of the Japanese.

About the Author: Jeff Patterson
Jeff Patterson
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About the Author: Jeff Patterson
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