The Japanese central bank, Bank of Japan, in a statement early February, said that it plans to pursue its zero percent interest rate policy, which would imply a weaker Yen, especially after the US having raised its interest rates. However, in a recent statement, the Bank stated that it may be open to ending the easy monetary regime and may raise interest rates.
Japan seems to be in a catch 22 situation. Its economy is not in the best of shapes. So if it raises interest rates, any chance of rapid revival would be doomed. If it doesn’t raise interest rates, its currency will slip.
In economics it has been said that the currency of a country is like a stock. It reflects the health of the economy. Thus, if Japan’s economy is not in the best of shapes, a softer Yen is only revealing the truth. And, a softer Yen may actually help Japan with its exports as they would get cheaper.
More on the Yen, from the International Herald Tribune.
Your Comments
Post a comment