BOJ’s Kuroda says FX should reflect Fundamentals

Bank of Japan Governor Haruhiko Kuroda said on Tuesday it was important for currency rates to reflect economic fundamentals, and reiterated that central bank policy is aimed at fostering price stability and not to weaken the yen.

Speaking to reporters after a meeting with Prime Minister Shinzo Abe over lunch, Kuroda said the two did not discuss currency moves.

“I don’t want to comment on currency levels or the speed of currency moves. It’s important for currencies to reflect economic fundamentals and desirable that currencies move in a stable manner,” Kuroda said.

“Central banks are pursuing policy for price stability,” he added, shrugging off the view the BOJ’s massive stimulus program was aimed at directly weakening the yen.

Kuroda said he briefed Abe on the global economy and discussions at last week’s Group of Seven (G7) meeting of finance ministers and central bank governors.

The dollar rose above 125 yen on Tuesday for the first time since late 2002 after upbeat U.S. data and on expectations the BOJ will have to ease policy again later this year.

Some economists and politicians have begun to worry about the drawbacks of a much-weaker yen, such as boosting import costs and eroding consumers’ purchasing power, which could outweigh benefits to exporters.

The meeting is part of a series of regular talks the BOJ governor and the premier hold on the broader economy.

Source: Reuters