(Seoul=Yonhap Infomax) Ji Yeon Kim – Expectations are rising that Japanese Prime Minister Sanae Takaiichi will take a more proactive approach to currency intervention as the yen continues to weaken.


According to the Japan Times on the 24th, Takuji Aida, chief economist at Crédit Agricole Securities and a key economic adviser to Prime Minister Takaiichi, said on NHK the previous day, “I believe the Takaiichi administration will be more active in intervening in the foreign exchange market.”


He added that Japan’s fiscal situation is not severe, and the country’s foreign reserves are sufficient to support intervention.


Aida is a member of the newly established Japan Growth Strategy Council under the Takaiichi administration.


Last week, Aida also warned that “government intervention in the foreign exchange market could come sooner than expected,” suggesting that Tokyo may act before the dollar-yen rate reaches the de facto intervention threshold.


Japan’s government intervened in the market last year when the dollar-yen rate surpassed 160 yen, buying yen to stem the currency’s decline.


Last week, the dollar-yen rate broke through 157 yen, sending the yen to its lowest level in 10 months amid concerns over Prime Minister Takaiichi’s large-scale stimulus package. However, the rate later saw a slight correction, trading at 156.718 yen as of 09:25 AM, up 0.22% from the previous session.


On the 21st, Prime Minister Takaiichi announced a massive stimulus package totaling 21.3 trillion yen (approximately 199.2 trillion won).


Takaiichi’s support for expansionary fiscal policy and her negative stance on Bank of Japan (BOJ) rate hikes have fueled the yen’s weakness.


The BOJ is scheduled to decide its key interest rate on December 19.


BOJ Governor Kazuo Ueda met with Prime Minister Takaiichi last week, explaining that the central bank is “in the process of unwinding the monetary easing policies implemented by his predecessor.” Takaiichi responded that she understood the explanation.


Meanwhile, Aida emphasized that even if Japan needs to issue government bonds, it is important to invest in key industries such as artificial intelligence (AI), defense, and naval vessels like escort ships, as part of the large-scale economic measures announced by Prime Minister Takaiichi.


He added that under the Takaiichi administration, “Japan will achieve a balance between stable economic growth and price stability.”


jykim@yna.co.kr


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