Japan’s Kihara: Specific monetary policy means are up to the BoJ to decide
Japanese Chief Cabinet Secretary Minoru Kihara said on Wednesday, “specific monetary policy means are up to the Bank of Japan (BoJ) to decide.”
Additional comments
No comment on foreign officials' comments when asked about US Treasury Secretary Scott Bessent's comment on the Yen
Expect the BoJ to conduct appropriate monetary policy to sustainably and stably hit its price target, while working closely with the government.
No comment when asked about a report that PM Takaichi asked BoJ Governor Ueda to buy Japanese government bonds (JGB).
Govt and BoJ are communicating closely on various levels about economic and financial trends.
No comment on bond yields as they are set by the market based on various factors.
Market reaction
The Japanese Yen (JPY) is gaining traction following these comments, dragging USD/JPY 0.22% lower on the day at 157.38, as of writing.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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