On Monday, Bank of Japan Governor, Haruhiko Kuroda vowed to remain to aggressive monetary easing to assist the economy recover from the COVID-19-induced slump, dismissing any suggestions of a shift away from the stimulus plan.
Kuroda stated with the parliament that the yen was regaining stability after a period of “undesirable” fast decline. The circumstances were currently improving, with the dollar’s strength declining to around 127 yen.
Earlier this month, the Japanese yen fell to two-decade lows against the dollar, sparking fears of increased living costs.
Some opponents criticized the BOJ’s monetary easing at a time when the Federal Reserve in the United States is tightening policy, causing the dollar to rise.
When challenged by an opposition politician to explain any link between the BOJ’s monetary easing and the decline of the yen, Kuroda responded:
“I don’t believe the Bank of Japan’s monetary policy was the cause of the yen’s fast decline.
“An exceptional situation in which oil prices reached $130 per barrel may have pushed the yen lower recently.”Kuroda
Japan’s core consumer prices grew 2.1% in the year to April. This is the quickest rate in seven years, excluding fresh food but including oil goods.
According to Kuroda, the weak yen accounted for a quarter of the gain. However, increases in dollar-still denominate global commodities prices accounted for the rest.
There should be an expectation that the yen might continue to fall. This may also cause the rise in commodity prices as well.
Read more: Economies