Japan premier warns of negative impact on companies from weak yen

FILE PHOTO: Japan’s new prime minister Fumio Kishida delivers his first policy speech at parliament in Tokyo, Japan, October 8, 2021. REUTERS/Kim Kyung-Hoon

TOKYO (Reuters) -Japan’s Prime Minister Fumio Kishida said on Tuesday the government will scrutinise the impact on the economy from any further declines in the yen, which risk hurting corporate profits.

Japan’s wholesale inflation hit a 13-year high in September as rising global commodity prices and a weak yen drove up input costs, adding more stress on firms already hit by supply constraints and clouding the outlook for the economy.

“If the yen weakens further, it will boost exports. On the other hand, it will lead to a rise in costs for companies through higher import costs,” Kishida told parliament.

“We will closely watch the impact of currency moves on companies,” he said, when asked by an opposition lawmaker on how the government would respond to excessive yen declines.

The government will help small and midsize firms cope with the rise in costs through financial support and steps to boost their productivity, he added.

Japanese policymakers have historically welcomed a weaker yen as it makes the export-reliant economy’s goods more competitive abroad.

But domestic firms are also vulnerable to rising costs from a weak yen, given the country’s heavy reliance on imports for fuel, raw material and food.

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