Bank of Japan Governor Masaaki Shirakawa said that the nation’s economy remains weak as the central bank prepares to decide whether to add to stimulus for the fourth time in five months.
“Exports and production are decreasing as the global slowdown continues,” Shirakawa said at a gathering of BOJ branch managers in Tokyo today, adding that the bank will pursue “powerful monetary easing.”
At its meeting on Jan. 21-22, the BOJ will adopt a 2 percent inflation target advocated by Prime Minister Shinzo Abe, doubling its existing goal of 1 percent, according to people familiar with officials’ discussions. The yen has fallen around 10 percent against the dollar in the last two months as Abe urged aggressive easing to end deflation and boost growth.
The currency was 0.2 percent lower at 89.62 per dollar as of 10:10 a.m. in Tokyo.
At its last meeting in December, the BOJ increased its asset-purchase fund to 76 trillion yen ($848 billion) from 66 trillion yen.
Japan’s top currency official, Takehiko Nakao, said in Hong Kong yesterday that his nation isn’t engaged in “competitive” devaluation.
Bank of Korea Governor Kim Choong Soo said yesterday that his country may need to take action to mitigate the impact of a weakening yen on South Korean exports.
“If volatility increases driven by speculative motivation, authorities should act to normalize the market,” Kim told reporters at a briefing in Seoul.
In the U.S., Federal Reserve Bank of St. Louis President James Bullard said Jan. 10 that he’s “a little disturbed” by Japan’s currency stance and the risk of “beggar-thy-neighbor” policies.
Japan posted a larger-than-expected current account deficit in November, data showed last week. Big manufacturers are the most pessimistic in almost three years, even as a sliding yen aids exporters from Toyota Motor Corp. to Panasonic Corp.