Japan's Katayama: Need to communicate JGB market before budget compilation
In the Asian trading session on Tuesday, Japan Finance Minister (FM) Satsuki Katayama highlighted the need to communicate to market financial and Japanese Government Bonds (JGBs) markets regarding administration’s intentions towards the fiscal policy stance.
On Monday, Japan Prime Minister (PM) Sanae Takaichi addressed the need for an exit from the excessive tight fiscal policy to spurt growth. However, Takaichi confirmed that the government won’t pursue a reckless spending.
Remarks from Japan FM Katayama
Can't comment on source for funding food tax cut beyond what PM said yesterday.
Important to communicate with markets on process of compiling budget.
Must communicate with JGB market in run up to budget compilation, we hadn't done that.
Monetary policy is part of economic policy, as stated in BoJ act.
Believe government's relationship with BoJ has been smooth.
Economic blueprint draft dropped out some consideration of history on BoJ-government relationship, as our desire for proactive fiscal policy has come to forefront.
Very good that final version of economic blueprint has won market understanding.
Weak Yen have both merits, demerits.
Won't comment on potential intervention.
No change in our stance that we're ready to respond on forex as needed.
US, Japan both share this stance on Forex.
GPIF portfolio is far short on alternative investments.
My remarks on GPIF portfolio were meant that households should benefit from economy to be boosted by growth strategy.
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.
