An economic adviser to Prime Minister Shinzo Abe indicated the yen has weakened enough and that the Bank of Japan needn’t force inflation to its 2 percent target.
The yen at 120 against the dollar is “considerably weak” and a level around 105 would be appropriate based on purchasing power parity, Koichi Hamada said on BS Fuji television Monday evening in Tokyo.
The yen’s 23 percent decline since the central bank began unprecedented monetary stimulus two years ago helped drive up profits of big exporters while heaping heavier costs on small companies and importers. Hamada’s comments add to signs of growing unease in the Abe administration of the drawbacks of the currency’s drop.
“There’s no need to force inflation to 2 percent,” said Hamada.
The BOJ last week its kept its record asset purchase plan unchanged as Governor Haruhiko Kuroda tries to spur inflation that has stalled with the tumble in oil prices.
The yen traded at 120.01 per dollar at 9:03 a.m. in Tokyo.