New York, Jan. 17 (Jiji Press)–The “vulnerability of the Japanese economy” is one of reasons for the yen’s recent downtrend against the dollar, former Japanese currency diplomat Hiroshi Watanabe said in an interview with Jiji Press in New York on Wednesday.
Watanabe, former vice finance minister for international affairs and now president of the Institute for International Monetary Affairs, pointed out that Japan cannot supply food and energy on its own.
In the interview, Watanabe forecast that the dollar would “stay in the upper 140-yen range for the time being” chiefly because the Japan-U.S. interest rate gap is expected to remain wide.
In New York trading the same day, the dollar climbed above 148.00 yen to the highest levels in one and a half months as expectations of an early interest rate cut by the U.S. Federal Reserve receded.
The rate gap is unlikely to shrink soon because the Fed finds it unnecessary to quickly bring down interest rates to pre-tightening levels amid growing expectations of the U.S. economy achieving a “soft landing” while the Bank of Japan is vague about when to end its negative interest rate policy and raise key rates above zero, Watanabe said.
[Copyright The Jiji Press, Ltd.]