Japan must fix 'misunderstanding' it is manipulating yen, says ex-BOJ chief Kuroda

Reuters

08-03-2025

Summary
Japan has made huge efforts to prevent yen falls, Kuroda says
BOJ raising rates, not intentionally weakening yen
BOJ taking 'right' step by raising rates gradually
TOKYO, March 8 (Reuters) - Japan must fix "any misunderstanding" held by U.S. President Donald Trump that its central bank was intentionally weakening the yen with monetary policy, former Bank of Japan Governor Haruhiko Kuroda said.
Trump said on Monday he had told Japan and China they could not continue to reduce the value of their currencies, as doing so would be unfair to the United States.
Asked about Trump's comment on Friday night, Kuroda told a Japanese television interviewer there were limits to what Japan could do to prop up the yen if the dollar were to rise on prospects of higher U.S. inflation from Trump's planned tariffs.
"In fact, the Japanese government has been making huge efforts to prevent the yen from weakening," such as by intervening in the exchange-rate market to support its currency, Kuroda said.
After a prolonged period of ultra-easy policy, the BOJ has begun raising interest rates, while the government made rare currency market interventions in 2022 and last year to boost the yen, which in July hit a 38-year low near 162 to the dollar. The dollar ended this week around 148 yen.
"The BOJ is not intentionally guiding the yen lower with monetary policy. If there's any misunderstanding on that point, it needs to be addressed," Kuroda said.
While he has spoken in several seminars, it was the first time Kuroda appeared on television since retiring as BOJ head.
BOJ TO CONTINUE NORMALISING RATES
The central bank is unwinding the radical monetary easing that Kuroda engineered during his 2013-2023 tenure to break Japan free from decades of deflation and sputtering growth. Under him, the BOJ deployed a massive asset-buying programme in 2013, then negative interest rates and bond yield control in 2016.
Yen falls caused by the initial blow of stimulus, and further declines driven by prospects of prolonged low rates, drew criticism from Washington, including the first Trump administration, that Tokyo was trying to keep the yen weak to give Japanese exports a competitive advantage.
Under current Governor Kazuo Ueda, the BOJ exited the radical stimulus measures in March last year and raised short-term rates to 0.5% in January, on the view that Japan was on the cusp of sustainably achieving its 2% inflation target.
Kuroda said the BOJ was taking the right step by gradually raising rates as maintaining ultra-loose policy for too long could drive up inflation.
"The BOJ is already normalising monetary policy and will steadily proceed on this front, such as by gradually hiking rates toward levels deemed neutral" to the economy, Kuroda said.
"Raising rates quickly above neutral or keeping rates low for too long are both inappropriate," he said.
In a research paper issued in January, Kuroda said the BOJ would likely keep raising rates in the coming years as inflation appears on track to sustainably hit its 2% target.