Pressure is building for Japan to give up its ultra-loose monetary policy
South China Morning PostFeb 04, 2023
On Tuesday, Japan’s Ministry of Finance (MOF) confirmed in its daily operational report for the quarter ending December 2022 that it made record interventions in the foreign exchange market, stepping in three times in 2022 to counter the yen’s more than 20% fall against the dollar.
The MOF conducted the interventions twice in October in its largest-ever yen-buying operation. Japanese authorities announced their first yen-buying, dollar-selling operation in 25 years on Sept. 22.
Japan has been bucking the global trend, opting for a loose monetary policy amid global inflation, and it's clearly not working. In addition to experiencing rampant inflation, Japan’s yen has also weakened substantially. Japan’s financial leaders must change their policies to improve the country’s economy.
A weakened yen isn't necessarily a bad thing, as foreign companies look to import more Japanese goods when the yen is weaker. Japanese companies are seeing big gains in the stock market as exporters, especially in the auto industry, become more competitive and increase sales abroad.