Japan's digital minister, Taro Kono, called on the Bank of Japan to raise interest rates in an interview on Wednesday to boost the yen and lower energy and food prices, and hinted at his interest in running for prime minister.
In the interview, Kono highlighted the problems caused by the sharp depreciation of the yen against the dollar, including the inflationary effect on domestic prices. He said that while the depreciation of the yen is good for boosting exports, this advantage has become limited because many Japanese companies have production facilities overseas.
“The currency is a problem for Japan,” Kono said. “The yen is too cheap and we need to make it stronger.”
On Wednesday, the dollar's decline against the yen widened to more than 1%, falling close to the 156 mark at one point, reducing the need for Japanese authorities to enter the market again to support the yen. The dollar has been volatile against the yen in recent months, hitting a 38-year high of 161.95 on July 3.
The yen has fallen nearly 12% over the past year, the worst performance among G10 currencies. Although the Bank of Japan raised interest rates for the first time since 2007 in March, market sentiment remains sluggish and bears dominate. According to most economists surveyed, the Bank of Japan is not expected to raise interest rates at the end of July, which may trigger a new round of yen declines.
Japan’s monetary authorities have been fighting a weaker yen recently, with interventions totaling about 5.64 trillion yen ($35.6 billion) on Thursday and Friday, according to foreign media and estimates from Bank of Japan data and currency brokers.
Japan's top foreign exchange diplomat said on Wednesday that Japan would not rule out intervening in the market if the yen falls too far, led by speculators, Kyodo News reported, adding that there were no limits on Japan's intervention in the market.
Go Ohara, head of Mitsubishi UFJ's foreign exchange trading department, even predicts that the yen may rise to nearly 155 against the dollar.
Former U.S. President Donald Trump criticized Japan for benefiting from a weaker yen in an interview published on Tuesday. Kono said Japan was also concerned about its currency depreciating too much, adding that the two countries probably had the same view.
Kono's comments are likely to add pressure on the Bank of Japan's policy board to raise interest rates when it meets at the end of this month.
Kono, who has long said his ultimate goal is to become prime minister, sidestepped questions about whether he would replace Kishida in a September election for the ruling Liberal Democratic Party's president, a position whose leader is almost certain to become prime minister given the party's dominance in parliament.
Japanese media recently reported that Kono had disclosed his intention to run to Deputy Prime Minister Taro Aso. Kono declined to confirm the reports.
Taro Kono ran for the presidency of the Liberal Democratic Party in 2021 and ultimately lost in second place. Although he has strong support among the grassroots members of the Liberal Democratic Party, he has always struggled to win broad support among Liberal Democratic Party lawmakers.
In the interview, Kono said the appeal of becoming prime minister includes being able to push his own policy proposals. When asked if his goal was to become prime minister, Kono responded, "Hopefully one day."
The article is forwarded from: Jinshi Data