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00:00Tell us a little bit about perhaps what differences if any you're seeing from the weakness of the Japanese yen now to previous bouts in the past. Know even though the last week it hit the day 125 I think would be just the limit to how much is done today. You see incident and do you go down to around the 124 coming years to that end even though the U.S. and also the U.K. the monetary policy has been changed. Does Use Nation is a group that has no intention to change at this moment to adapt. But I think that the political pressure from the parliament and those the people and also the media is going to have being a little bit higher. So I think there will be some more discussion in Japan that. But I think there will be no big change in the monetary policy and also the elevated exchange market in Tokyo. Let's talk a little bit about the political pressure because we know that a weak Japanese yen really hurts households hurts those small and medium sized businesses and it actually helps bigger a large corporations. Right. So can a weak yen go together with Prime Minister Kishi. Does drive of new capitalism and more equity. I think that he has known more the sentiment to the stock market does is Mr. Seguin missed out there has shone through that. But I think that the current Dean price hike in the food and energy is giving somewhat the negative e sentiment to the people that I think the day before the election though was the upper house in the summer. The basic issue that is going to think about how did you government can cope with such kind of a movement over the weekend to that. But then I think that they wound up under 125 is not so much today but in the expected to range do that. So I think that on the one 20 it had to have some big with the nicotine impact for the consumers and the small and medium sized enterprises. And even though they such as the UK yen would not give us a good the mallet to fall we will for the big already enterprises. So I think the particular side they are going to have some more pressure to the protect their yen against depreciation. Do that. But I think that is still the Japanese economy is not so rosy at this moment. And the first of April was even more so as the company shows somewhat that the declining the sentiment for the coming days stood out. So I think that the BJP is going to keep with this position though within the lower interest rate in the policy in Japan in the coming year. It's pure the quarters. That's my expectation. If equality is the goal should the prime minister and the government be spending more to support households and corporations and companies when it comes to rising costs. Or they data some discussion is starting. Indeed the parliament does it. But I think the order lost the end of the 2020 deal provided the huge amount with the money to the people to do that. So the current rates are low. The government is going to give someone the assurance there will be no more the debt super high inflation in the coming days to that. So even the hike over the energy price and also the high of the food the prices are going to have a negative impact. Could that be due to be somewhat deeper than the mitigated in the coming days to that. So I think that the sometime in the two months or three months there would be some kind of destabilization of the price. That is the government. The position that this moment does yield curve control makes sense for the VIX. Given that way we have an aggressively tightening fed is a sustainable. But so far I think the Japanese impression is not so the pie. And those even the U.S. is going to have a very quick pace oversee the raising of the interest rate. But I ordered the market has the the. So I know it's such kind of a sentiment and I think that the day would have been no big a sudden the change in the coming days to that. I think with authority as you've mentioned it has hit the one 125 in the last week to that. But I think it's kind of the front loading with the action of the market to adapt so steals even more so as the market people believe. So 120 around the river easy future of the expectation do that. So I think ISE followed it to maintain the entire market. I think that to be it would not the boom at this moment to that. What changed as Japan need most desperately right now. But a country anyway DEA agents Japanese steel industry is somewhat to the keeping with the weak sentiment through that sort of the. And also the assumption the pressure is coming from the Sea of 26 agreement to that. So now the geo swaggering how to reconstruct and how to rebuild the Japanese industry do that. So I think that within the three months of the government and also the industry people is going to have the kind of the future the Japanese the economy and the Japanese industry can take that would be very much important to them. So I think that the monetary policy and also doesn't need sentiment towards the debt market the people in the extended market is not the main concern to that. So how to revive and how to rebuild Japan. These are quite important to them. I think that is the one that was the slogan. Oh Mr. Kishi has given that new the capital reason that disease is the main concern over disease issues.

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Japan Ahead: IIMA's Hiroshi Watanabe

Hiroshi Watanabe, President at the Institute for International Monetary Affairs, discusses his outlook for Japan's economy and yen. He previously served as Japan's Vice Minister of Finance for International Affairs, where he oversaw the country's currency policy. He speaks with Shery Ahn and Haidi Stroud-Watts on the latest segment of "Japan Ahead" on "Bloomberg Daybreak: Asia". (Source: Bloomberg)

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