Overview
- Prime Minister Sanae Takaichi highlighted benefits to exporters and government FX holdings from yen depreciation, then clarified she favors neither a strong nor a weak currency.
- Finance Minister Satsuki Katayama reiterated readiness to act against excessive FX moves, as recent yen spikes followed reports of New York Fed “rate checks” seen by traders as a warning sign.
- The yen hovers near 18‑month lows and super‑long JGBs recently sold off after food tax‑cut pledges, though markets have steadied with USD/JPY trading around 154–155.
- The BOJ’s January summary showed several board members warning of sticky inflation linked to a weak yen and calling for timely rate hikes, with one member judging financial conditions still considerably accommodative.
- Economists cautioned that consumption tax cuts could undermine fiscal credibility, and former currency diplomat Hiroshi Watanabe warned any broader relief could reignite bond and FX selloffs reminiscent of the ‘Truss shock.’