Some BOJ board members see positive impact on Japan’s economy from weak yen

Some members of the Bank of Japan‘s (BOJ) policy board said in October the yen’s weakening would have a positive effect on the Japanese economy as a whole even though its impact on boosting exports was not as strong as before, the minutes of a meeting showed.

At the Oct. 27-28 meeting, the nine-member board debated the impact of a weak yen on the Japanese economy, and one member noted that they should bear in mind the currencys impacts are uneven depending on sectors and the size of business, the minutes showed on Wednesday.

“A few members said the effects of the weak yen pushing up exports have weakened from before, but that they are exerting a positive impact on the Japanese economy as a whole via increase in business profits overseas and stock prices,” the minutes showed.

Another member said the weak yen reflects differences in inflation and monetary policy stances in each country, so various channels must be examined such as the real economy and financial markets.

The board members agreed that they would not hesitate to take additional easing steps as necessary, while watching effects of the COVID-19 pandemic.

At the October meeting, the BOJ maintained its target for short-term interest rates at -0.1% and that for 10-year bond yields around 0% at the two-day rate review.

The dollar has been moving in a narrow range around 113-114 yen after hitting a four-year high of 114.585 yen on Oct. 20, prompting the government to call for a “stable” currency.

Last week, the BOJ dialed back emergency pandemic funding but maintained ultra-loose policy and extended financial relief for small firms.

The BOJ maintained its view Japans economy was picking up as a trend, but cautioned that developments surrounding the pandemic and supply constraints cloud the outlook.

(Reporting by Tetsushi Kajimoto; Editing by Muralikumar Anantharaman and Stephen Coates)