©Reuters. Japan watches the devaluation of the yen, at a minimum of more than 6 years with the dollar
Tokyo, March 28 (.).- The Government of Japan is closely monitoring the recent downward trend in the yen, which reached its lowest level in six years and seven months against the dollar on Monday and has been experiencing a rapid devaluation “not desirable”.
“Currency stability is important and the government believes that a drastic fluctuation is not desirable,” Japanese government spokesman Hirokazu Matsuno told a news conference today.
Matsuno refrained from commenting on the Japanese stock market, which closed lower today despite the good reception that this monetary trend has in the national exporting muscle, but pointed out that the authorities “are carefully observing the development of the recent fall in the yen and its influence on the Japanese economy”.
Part of the devaluation of the yen is attributed to the unusual movement this Monday of the Bank of Japan (BoJ), which made two offers of unlimited purchase of debt bonds before a rise in long-term yields to 0.25%, its highest level in six years, in line with its goal of keeping these yields around 0%.
The Japanese central bank has an ultra-easy monetary policy based on negative interest rates of -0.1% for short-term rates and a bond purchase program to keep 10-year yields flat, with a maximum fluctuation of between -0.25% and 0.25%.
Faced with the increase in yields, the BoJ issued an offer during the first trading tranche that did not work, which was followed by another unusual offer in the second half to buy unlimited bonds with a maturity of 5 years or more.
The entity issued a statement after the closing of the negotiation saying that it will continue with the unlimited purchase offers at least until the end of the month, which it will adjust with flexibility.
Financial analysts interpret this gesture as a message indicating that the Japanese central bank intends to maintain its current rates, despite the fact that entities from other countries are already moving in the opposite direction of the rate hike, as the Federal Reserve has recently emphasized. (Fed) of the United States.
The governor of the BoJ, Haruhiko Kuroda, has reiterated that this immobility is necessary given the modest economic recovery and the entity’s elusive 2% inflation target.
Japanese debt bond yields have been rising on Fed rate hike announcements and prospects of a further rift between US and Japanese monetary policies have led the dollar to soar against the yen.
The greenback touched 125 yen today for the first time since August 2015 after an accelerated evolution from the average range of 119 yen where it moved a week ago.
The dollar was trading in the low range of 122 yen at the opening in Tokyo and the offers of the BoJ seemed to be the trigger for the rise during the day.
Despite the fact that this reduction in prices has a positive effect on the Asian country’s exporters, some analysts believe that the BoJ’s unlimited purchase offers could accentuate the devaluation in an unwanted way and end up inflating the country’s import costs, which are already increasing.
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