Japan’s Chief Cabinet Secretary Yoshihide Suga Hints at FX Intervention

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Yoshihide Suga, Japan’s chief cabinet secretary, said today that another FX market intervention may be on the way. The Japanese yen has appreciated significantly against the dollar this year, impacting exporters.

"Through the meetings, the government will closely watch market moves and respond appropriately," said Suga.

In an interview with Reuters, Suga explained that Bank of Japan’s negative interest rates policy, which was adopted in January, is agreeable with the Shinzo Abe administration and that the government will not interfere with monetary policy decisions taken by the Bank of Japan.

Suga laid emphasis on the need to keep political meddling away from the BOJ, saying that the government will not object if the bank decided to cut interest rates further into negative territory, “In any case, it's important not to impair fiscal policy and the BOJ's independence," adds Suga.

The Bank of Japan has abstained from currency interventions to appease U.S. Treasury officials, who have previously said that such interventions result in an “unfair advantage that is very disruptive to the global economic system.”

The secretary’s comments today run directly against the wishes of Washington!

When Suga was questioned about the possibility of directly distributing money to households to stimulate the economy (helicopter money), the secretary responded by questioning the definition of the concept and reiterated the need for Japanese monetary authorities to defeat deflation.

Despite multiple currency interventions and monetary easing programs, including the most recent 2.7 trillion yen ETF purchases expansion, the BOJ has failed to meet its 2 percent inflation target.