Japan’s approach to its currency policy has always been a topic of interest and debate, especially given the country’s reliance on exports to drive economic growth. With the appointment of Atsushi Mimura as the new vice finance minister for international affairs, there are indications that there may be some changes in the way Japan handles its currency interventions.
In a recent interview, Mimura emphasized that Japan will continue to follow its basic approach on the yen, with intervention being an option to address excessively volatile moves in the exchange rate. He highlighted the importance of internationally agreed commitments that exchange rates should be determined by markets, but also acknowledged that interventions may be necessary in cases of excessive volatility or disorderly movements.
One interesting point raised by Mimura was the potential for a change in the style of communications with markets. He suggested that while being vocal is one style of communication, not speaking may also be another way of conveying messages. This nuanced approach to communication reflects a desire to avoid creating unnecessary market speculation or uncertainties.
Mimura also stressed the importance of cooperation between the Ministry of Finance, the Bank of Japan, and the Financial Services Agency. He noted that these three parties need to be on the same page regarding macroeconomic policy, indicating a commitment to coordinating efforts for the country’s economic stability and growth.
One key point highlighted by Mimura is the need to improve Japan’s economic competitiveness in order to address the weakening of the yen’s effective exchange rates. He emphasized that traditional manufacturing is not the only area of growth, pointing to inbound tourism, pop culture, soft culture, and other potential sectors as areas for development.
With Mimura’s background in financial regulation, including a stint at the Bank for International Settlements, he brings a wealth of expertise and international ties to his new role. His experience in setting up the Financial Stability Board during the global financial crisis showcases his commitment to reforming financial regulation and supervision.
The appointment of Atsushi Mimura as Japan’s new vice finance minister for international affairs signals a potential shift in the country’s approach to currency policy. His focus on communication with markets, cooperation with other agencies, and emphasis on economic competitiveness suggests a nuanced and strategic approach to managing Japan’s currency in the global market. As Japan continues to navigate economic challenges, Mimura’s expertise and leadership will play a crucial role in shaping the country’s currency policy for the future.