Koichi Hamada, the former Yale professor advising Japanese Prime Minister Shinzo Abe on choosing a new central bank chief, signalled that a yen at 110 per dollar would pose a problem for the economy.
“I think 100 yen is a good level for Japan, 110 is too weak but 95 or 100 is no problem,” Hamada said after a speech in Tokyo today, referring to the level of the yen against the dollar. “We need to bring the yen back to a level that works well for Japan’s economy.”
The yen has weakened about 4.5 percent since Abe took office last month, with his administration pushing for more monetary easing and a doubled inflation target at the central bank. The government and Bank of Japan will issue a joint policy statement at next week’s central bank meeting, Finance Minister Taro Aso said earlier today.
Hamada, who once taught the current BOJ governor, Masaaki Shirakawa, said that the central bank has no choice but to conduct further monetary easing. He also said that the bank was to blame for the failure of Elpida Memory Inc. by not expanding its balance sheet sufficiently, which led to a strong yen. Japanese exporters have been hampered in recent years by strength in the yen, which reached a postwar high in 2011.
The currency was trading at 90.05 yen at 2:54 p.m in Tokyo, after touching a 2 1/2 year low of 90.21 earlier in the day. A range of 95-100 yen per dollar was last sustained in 2009.
Hamada also wondered if he should be advising Economy Minister Akira Amari on the yen. The minister moved the yen this week with comments he later said had been misinterpreted. Today, he said that speaking about the currency was the finance minister’s responsibility.