JAPAN’S top currency diplomat, Atsushi Mimura, on Monday (Mar 3) cautioned about foreign exchange moves and their negative impact on the country’s goal of achieving real wage growth.
Citing the government’s estimate that a 10 per cent depreciation of the yen can push up the inflation rate by 0.3 per cent, Mimura said foreign exchange “can have a decisive effect” on real wages when inflation-adjusted wage increases hover around 0 per cent.
A weak yen has been a headache for Japanese policymakers because it accelerates inflation by pushing up import costs, weighing on consumption.
Some analysts blame the Bank of Japan’s ultra-low interest rates and the slow pace of rate hikes for contributing to the weaker yen.
“I am talking to my US colleagues that probably for the United States the issue of the yen’s depreciation is a matter of trade balance; for us it really is a matter of inflation,” Mimura said, speaking at an event hosted by a research organisation.
“So this is one of the things that we should definitely try to further address going forward,” he added.
Mimura also noted that rising wages are one of the bright spots in Japan and emphasised it’s one of the government’s top policy priorities.
“We continuously hear not only from big companies but also from small and medium sized companies about the strong prospect of wage increases” in this year’s annual labour-management wage negotiations, he said. REUTERS
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