Japan’s Finance Minister Satsuki Katayama said on Monday that volatility in oil prices is affecting the foreign exchange market. Speaking to reporters after the first day of the G7 finance ministers meeting in France, she said she was seeing speculative moves in the financial markets.
key takeaways
Watching speculative moves in the financial markets.
Volatility in oil prices is affecting the foreign exchange market.
Told the G7 that we need to take action to correct global imbalances.
We need to address the risks associated with mythos.
Told the G7 that we must unite against China’s export controls on critical minerals.
We need to keep a close watch on the financial markets.
Prime Minister Takachi asked me to consider how to finance the planned additional budget while minimizing risks.
G7 not considering coordinated action on bond sales; Each country is responsible for its own market situation.
The G7 finance chiefs’ communiqué is likely to include statements on critical minerals pricing.
Will take appropriate action against foreign exchange volatility.
The G7 will discuss specific steps on risks related to Mythos ahead of the summit next month.
Bank of Japan FAQ
The Bank of Japan (BOJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and exercise currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan initiated an extremely loose monetary policy in 2013 to stimulate the economy and boost inflation amid a low-inflation environment. The bank’s policy is based on quantitative and qualitative easing (QQE) or printing money to buy assets such as government or corporate bonds to provide liquidity. In 2016, the Bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from its ultra-loose monetary policy stance.
The bank’s massive stimulus caused the yen to depreciate against its major currency peers. This process accelerated in 2022 and 2023 due to growing policy differences between the Bank of Japan and other main central banks, which opted to sharply raise interest rates to fight decades-high levels of inflation. The BOJ’s policy caused the gap with other currencies to widen, driving down the value of the yen. This trend partially reversed in 2024, when the BOJ decided to abandon its ultra-loose policy stance.
A weaker yen and rising global energy prices led Japanese inflation to exceed the BOJ’s 2% target. The prospect of rising wages in the country – a key element fueling inflation – also contributed to the move.
