In European trading on Monday (Oct. 24), / rose sharply, temporarily trading at 149.15, up 1.16 percent.
Japan has no good ideas. The authorities are increasingly criticized for sticking to their guns, but raising interest rates is too much to bear.
Observers believe that Japan is unable to raise interest rates for at least three reasons.
First, higher interest rates dampen demand.
Japan’s sluggish economic recovery has long been plagued by a lack of demand.
Second, higher interest rates will weigh on Japan’s finances.
A prolonged period of ultra-loose government finances has made it less fiscally binding and more daring to borrow.
In addition, higher interest rates add to corporate debt burdens.
Many small and medium-sized companies are already struggling under the pandemic, and higher interest rates would put them at risk of bankruptcy.
Kuroda has repeatedly said that against the backdrop of strong interest rate hikes, even a small interest rate hike in Japan will not be able to reverse the sharp decline in the yen, but may endanger Japan’s economic recovery.
Usd traded slightly above Monday’s fresh 32-year high of 149.08 to 149.38(NY) in JPY crosses, but the recent loss of upward momentum could limit prices below 149.50 and generate a much-needed correction, with a move below 148.89(NY low) to 148.42/45.
