Bank of Japan warns recent yen moves could be harmful By Reuters

Pur Tetsushi Kajimoto y Leika Kihara

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda said on Monday that recent moves in the yen have been “too sharp” and could hurt companies’ business plans, providing his strongest warning yet. The devaluation of the Japanese currency.

Kuroda said he has not changed his assessment that a weak yen in general is good for the economy, as it increases the value of profits that Japanese companies make abroad.

But he added that the yen’s slide to around 125-126 yen against the dollar, from 115-116 yen a month ago, is volatile enough to damage business.

“The recent decline in the yen, which has lost about 10 yen against the dollar in about a month, is very sharp and could make it difficult for companies to make business plans,” Kuroda told the Japanese parliament.

“In this sense, we have to take into account the negative impact” of a weaker yen, he said.

Traders bought the yen after the comment, which helped the dollar fall 0.22% to 126.25 yen on Monday.

However, Kuroda reiterated his view that the Bank of Japan should maintain its massive stimulus program to support Japan’s fragile economic recovery.

The yen fell to a two-decade low against the dollar on the prospect of widening interest rate differentials between the US and Japan, as the Bank of Japan is seen to keep interest rates very low even as the Federal Reserve plans a steady pace of rate hikes.

Kuroda has been consistently preaching the benefits of a weak yen, despite Japanese policymakers’ growing concern that a further decline in the yen could hurt the economy by inflating already soaring import costs for fuel and food.

(Reporting by Laika Kihara and Tetsushi Kajimoto; Additional reporting by Kantaro Komiya; Editing by Simon Cameron Moore and Shree Navaratnam; Translated by Jose Muñoz in the Gdansk newsroom)