Leaders of Japan's two major business organizations, in exclusive interviews with domestic media, stated that the yen's depreciation has increased import costs, putting pressure on households and companies, and called for government intervention.
Yoshinobu Tsutsui, chairman of Keidanren, Japan's largest business lobby, said in a joint interview with several domestic media outlets that external observers often emphasize the benefits of a weaker yen, such as boosting the profits of export-oriented companies.
However, Japanese media quoted him as pointing out that, from the perspective of the nation's overall strength, "it would be more advantageous in the long term for the yen's exchange rate to move towards a stronger level."
Despite the Bank of Japan raising interest rates twice within the year, the yen remained one of the worst-performing major currencies that year.
The persistent weakness of the yen and the resulting inflationary pressures recently prompted the Bank of Japan to convince the generally accommodative-minded Sanae Takaichi cabinet of the necessity for last month's rate hike; however, uncertainty surrounding the pace of subsequent interest rate increases has limited the yen's rebound potential.
By the end of the year, the yen was trading around 157 yen to the U.S. dollar, still at a relatively low level. This exchange rate level had previously triggered official statements from Japan about supporting the yen, while also intensifying market expectations that the Japanese government might intervene in the currency market.
In a separate interview with domestic media, Ken Kobayashi, Chairman of the Japan Chamber of Commerce and Industry, pointed out that the costs for small and medium-sized enterprises to procure raw materials are rising due to the weak yen.
As the weak yen is a significant factor driving inflation, the government and the Bank of Japan "need to eliminate the sense of helplessness felt by small business owners who import raw materials from overseas," he said.
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