Anna 
In a recent statement, Rintaro Tamaki, a former vice finance minister for international affairs, addressed concerns over the weakening of the Japanese yen. Tamaki suggested that beyond the conventional factors such as interest rate differentials, structural issues like a deteriorating fiscal position might contribute to the yen’s decline.
Tamaki expressed skepticism about the effectiveness of currency interventions by authorities in addressing the current market dynamics. While acknowledging that smoothing operations might be acceptable, he emphasized that intervening in the foreign exchange market would not address the fundamental structural challenges faced by Japan.
According to Tamaki, factors such as a lack of confidence in Japan’s public finances, declining competitiveness, an aging population, and a shrinking labor force could be influencing the hesitancy of Japanese authorities to implement bold policy measures.
He raised a critical question regarding overseas investors’ perspectives, questioning whether they see attractive prospects for investing in Japan given the current economic conditions. Tamaki implied that these structural issues might be hindering Japanese authorities from pursuing more robust policy initiatives.
Regarding the possibility of currency intervention, Tamaki drew on past experience, highlighting that interventions, particularly after the 2011 earthquake and tsunami, were aimed at restoring stability rather than altering currency levels. He stressed that interventions had a psychological impact but were not a sustainable solution to address the underlying challenges.
In conclusion, Tamaki’s remarks shed light on the complex interplay of factors influencing the Japanese yen’s weakness. As the currency faces pressures from both traditional elements like interest rates and deeper structural issues, addressing these concerns may require a comprehensive and nuanced approach that goes beyond short-term interventions.
