Japan able to sustain growth unseen since ’90s in Kuroda vision

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Kuroda, who advocated an inflation target more than a decade before the BOJ set its 2% objective last month, has been cited as the leading contender to succeed Shirakawa by economists at banks including JPMorgan Chase & Co. and Credit Suisse Group AG.

Shirakawa this month said he will leave almost three weeks before his term is up, on March 19, to align his departure with that of his two deputies.

With Abe making the end of deflation a key to his campaign ahead of a December election that swept his Liberal Democratic Party back to office, the yen has weakened and stocks have climbed since mid-November in anticipation of greater monetary stimulus.

The yen has declined about 14% in the past three months against the dollar, to 93.38 late yesterday in Asia. The Nikkei 225 Stock Average has jumped about 26% over the same period.

‘Natural’ Slide

“Basically this is natural adjustment from an excessively high or extremely high rate of exchange toward a more sustainable level,” Kuroda, who was in charge of currency policy at the Finance Ministry from 1999 to 2003, said yesterday. He declined to specify a fair value for the yen.

Japan has been criticized for driving down the yen by officials from South Korea to Russia in the run-up to a meeting of finance chiefs from the Group of 20 nations in Moscow this week. Abe administration officials have said that they are focused on ending deflation, rather than seeking a specific level for the yen.

Kuroda indicated that expectations for Abe’s policies had affected the exchange rate. “So-called Abenomics -- monetary easing, fiscal stimulus and growth strategy -- may have influenced exchange rate movements.”

Japan’s economy has suffered under a decade and a half of deflation, which has pushed up the real burden of debt and caused companies and households to put off spending, Kuroda said.

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