Japan continues to warn about market volatility, raises concerns about capex in a report By Stocksak

© Stocksak. FILE PHOTO – Banknotes made of Japanese yen can be seen in this illustration taken September 22, 2022. REUTERS/Florence Lo/Illustration/File photo

By Kantaro Komiya

TOKYO, Stocksak – Japan reiterated the warning about market volatility in its monthly economic reports published Tuesday. It was following repeated market interventions by government officials in the wake the yen’s slide down to a 32 year low.

Japan has attempted to stem the currency’s depreciation by buying yen last week at a record 5.5 billion yen ($36.95billion) and another suspected intervention Monday.

The October economic update kept the overall economy assessment unchanged for a fourth monthly period. It stated that the economy was in moderate recovery. However it raised its view of business spending while downgrading imports.

The government also reiterated the need to “pay attention to the effect of financial and capital markets fluctuations,” which it added to its September report.

A Cabinet Office official said that the phrase “mainly refers towards currency exchange trends but is also meant for warning against heightened volatility overall in other markets, including stocks and interest rates moves,” in a statement to reporters before the release of the report.

Due to the strong spending plans revealed in the Bank of Japan’s quarterly business survey, earlier this month, authorities raised their views on capital expenditures for the first time since February.

The import assessment was lowered due to a declining shipment volume from China and other Asian trading partners. Even the yen-denominated value of imports hit a record in September.

The government maintained its view on private consumption, which accounts more than half the Japanese gross domestic products, that it was moderately rising. The official stated that service spending was increasing, but that consumer sentiment has plummeted due to inflation, particularly among low-income earners.

Prime Minister Fumio Kishida’s government will release an economic stimulus package worth more than 20 trillion yen on Friday to support Japan’s fragile recovery from the pandemic.

Kishida announced Monday that the stimulus package will be published by the end of October despite the sudden resignation of Daishiro Yamagiwa (the minister responsible for economic revitalisation), as planned.

In its policy meeting that ends on Friday, the BOJ is expected keep ultra-low rates steady to support the economy, even if it means accelerating a fall of the yen.

($1 = 148.8400 yen)

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