2023-08-25 00:06:32
After Bank of Japan Governor Kazuo Ueda cited exchange rate volatility as the reason for policy revisions at a monetary policy meeting in July, Japanese stock investors have become less happy about the yen’s depreciation.
Bank of Japan Governor Ueda
Photographer: Kiyoshi Ota/Bloomberg
The Tokyo Stock Price Index (TOPIX) hit a 33-year high on August 1, and has continued to see heavy upsides since. For Japanese stocks, which have many export-related stocks, such as those in the electronics, automobile, and machinery sectors, a weaker yen tends to lead to buying in hopes of improving corporate earnings, but recently, as the yen continues to weaken, stock prices have gradually stagnated. I’m in.
Behind this is the risk that the yen will continue to appreciate in the event of foreign exchange intervention by the Japanese monetary authorities, as well as concerns about further policy revisions by the Bank of Japan. The Bank of Japan decided at its policy meeting on July 28 to make yield curve control (long-term interest rate control, YCC) more flexible, which had an impact on the world’s financial markets. Governor Ueda said in a post-meeting press conference that the policy revision also took into account currency market volatility.
Hiroshi Namioka, chief strategist at T&D Asset Management, said that if the yen were to depreciate further, the Bank of Japan would be conscious of a shift in policy direction. Prime Minister Fumio Kishida and Governor Ueda have held talks, and he said that policy revisions would inevitably be conscious.
Chief Strategist Matsuzawa Naka of Nomura Securities also said that the depreciation of the yen, which has contributed to the predominance of Japanese stocks relative to global stocks, “not only no longer works to push up Japanese stocks, but rather has become a factor for lower stock prices by increasing expectations for an interest rate hike by the Bank of Japan. ’” the report notes.
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