Bank of Japan Governor Masaaki Shirakawa gave a press conference following the bank’s unilateral intervention in the currency markets earlier in the day that resulted in weakening the yen considerably against the dollar which rose by 5 percent.
Shirakawa told reporters that it was important to focus on risks to Japan’s economic outlook as rises in the yen would have a big impact on the country’s exports as well as corporate revenues and sentiment. He added that the speculative moves on yen recently did not truly reflect the health of the Japanese economy. They were “one-sided” moves.
Last week the Bank of Japan decided to ease monetary policy further by increasing its bond asset purchases. The decision was spurred by the yen’s rises to record highs, the global economic slowdown and Europe’s debt crisis, which threatened Japan’s recovery prospects.
But Shirakawa said that the effects of monetary easing take over a year to two years to show in the economy and that the central bank does not conduct policy based on daily currency moves.
He also ruled out the possibility of the BOJ buying foreign assets or euro zone bonds as part of efforts to weaken the yen, an idea floated by some academics and business executives.