TOKYO: Bank of Japan (BoJ) governor Haruhiko Kuroda weighed in with his strongest remarks on the yen in recent days, in an apparent bid to slow down movement in Japan’s weakening currency and its impact on a fragile economy.

       “If you look at moves in foreign exchange rates over the longer term such as the past decade, fluctuations have gotten smaller but as pointed out, the recent moves in foreign exchange rates seem somewhat rapid,” Kuroda said in response to questions in parliament yesterday.

       The governor spoke a week after the yen hit its weakest since summer 2015 after the central bank ramped up its defence of a bond-yield ceiling.

       “Kuroda probably meant to make general comments,” said Daisuke Karakama, chief market economist at Mizuho Bank in Tokyo.

       “But how they are perceived in the market can be different, as was the case in 2015. The current yen level could even become a new ceiling.”

       The BoJ showed last week how determined it would be in keeping interest rates locked near zero despite skyrocketing inflation across the globe and the risk of weakening the yen to damaging levels.

       With a four-day long unlimited bond buying spree, it signalled it would not relent until it was convinced a revival in inflation was sustainable.

       But the fall in the yen is still a concern for Japan’s policy makers as it amplifies the effect of the fastest rising energy prices in four decades, with the economy already feared to have shrunk again last quarter.

       The weaker currency is also fuelling speculation that the central bank may tweak policy in response, a possibility that Kuroda repeatedly denied.

       “They were the clearest signal to date from Kuroda that the BoJ is not thrilled by the yen moves of recent weeks,” said Ray Attrill, head of foreign-exchange strategy at National Australia Bank Ltd (NAB) in Sydney, referring to the governor’s comments on the yen.

       Market participants have been closely watching the governor’s comments to gauge if there has been a shift in his tolerance for a weaker yen. In 2015, Kuroda made comments interpreted as defending the yen around the 125 (RM4.30) mark, a level that became known as the Kuroda line.

       “We will continue to watch foreign exchange rates closely as it has a large impact on the economy and inflation,” Kuroda said. “It’s important for currency rates to reflect the fundamentals of the economy and finance.”

       Kuroda’s reiteration that a weaker yen was still positive for the economy overall indicated that he was looking to slow currency moves for now rather than set a new line in the sand or reinforce the earlier mark.

       Currency intervention was highly unlikely other than with the co-operation of other monetary authorities and only came onto the radar if there were much bigger or more disorderly moves, said NAB’s Attrill. It is also the prerogative of the Finance Ministry, not the BoJ, he added. — Bloomberg