Japan’s Kiuchi says aim to balance robust economy with fiscal sustainability

Japan's Minister of Economy, Minoru Kiuchi, expressed on Thursday that the focus is on achieving a balance between a strong economy and fiscal sustainability. However, he refrained from providing any insights about interest rates. The aim is to address market concerns and provide reassurance. The USD/JPY pair has seen a slight decrease of 0.10% on the day, trading at 156.10.

The Japanese Yen (JPY) plays a significant role in the global currency market, with its value influenced by various factors such as the performance of the Japanese economy, the Bank of Japan's policy, the difference between Japanese and US bond yields, and trader sentiment. The Bank of Japan (BoJ) has the mandate for currency control, and its actions are crucial for the Yen's value.

The BoJ's ultra-loose monetary policy between 2013 and 2024 led to the Yen depreciating against other major currencies due to policy divergence with other central banks, particularly the US Federal Reserve. Recently, the BoJ's gradual shift away from ultra-loose policy, combined with rate cuts in other major central banks, has helped narrow this differential.

The Yen is often considered a safe-haven investment during market stress, as investors prefer its perceived reliability and stability.