The yen is too weak and its benefits for Japanese stocks are diminishing while negative economic side effects are starting to show, according to the chief of the nation’s stock exchanges.
While it’s natural for the currency to drop given a widening interest rate gap between Japan and the rest of the world, the depreciation is pushing up the nation’s import bill, notably for key energy items such as oil, said Hiromi Yamaji, chief executive officer of Japan Exchange Group Inc. At the same time, it’s no longer such a big tailwind for manufacturers like automakers, which have factories all around the world, he said.
He’s also confident that the nation can cope with interest rates rising from around zero. The Bank of Japan will eventually raise rates and the stock market should be able to absorb the impact because the move will signal that policymakers sees stable inflation in the economy, Yamaji said. “We have further room for improvement,” said Yamaji, who started his current job in April after a promotion from the Tokyo exchange CEO position. Before that, he was an executive at Nomura Holdings Inc.
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