- Nishimura says Japan needs 10 trillion yen stimulus package
- Expects BOJ to take appropriate additional action this week
Japan’s former deputy economy minister said the yen was too strong at current levels of around 110 to the dollar, indicating dissatisfaction with the currency’s 8 percent rise this year amid global economic anxiety.
"Even at about 110 yen, I think the yen has strengthened too much," Yasutoshi Nishimura said in an interview at his Tokyo office on Monday. While a "calmer market" would be better, he said he did not have a particular target in mind.
The Japanese currency surged past 108 earlier this month -- a level not seen since 2014 -- but was trading around 111 as of 10 a.m. in Tokyo. The stronger yen is hurting profits at Japanese exporters, which benefited from its slide under Bank of Japan Governor Haruhiko Kuroda’s ultra-easy monetary policy.
Nishimura helped forge Prime Minister Shinzo Abe’s economic policy during nearly three years as deputy minister through 2015. He now heads the lower house cabinet committee.
Growing uncertainty over the economy means the government should compile a stimulus package of about 10 trillion yen ($90 billion), with several trillion yen in fresh funding, Nishimura said. The money should be spent on projects such as research into artificial intelligence; infrastructure to encourage foreign tourism and disaster prevention measures, he said, adding that legislation for an extra budget will probably be submitted to parliament after the summer.
Asked whether the government would proceed with a plan to increase the national sales tax to 10 percent next April, Nishimura said that the government’s basic policy was to create the environment to allow the tax hike. The decision should be made before an upper house election expected in July, he said, taking into account the May 18 release of gross domestic product data for the first three months of the year.
Asked about the Bank of Japan’s policy meeting today and tomorrow, Nishimura said he expected the central bank to take appropriate additional action and denied that monetary easing was reaching its limits.