Deputy Prime Minister Aso's Remarks on 'First Yen Weakness in 40 Years' Draw Attention to Impact on Forex Market

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Deputy Prime Minister Taro Aso said at a Liberal Democratic Party faction meeting that he is 'also concerned about the exchange rate trend, which is at a level of yen weakness not seen in roughly 40 years,' drawing attention to whether there will be a shift in the administration's tolerance of the weak yen. Since the start of July, the dollar-yen pair has at times surged from the upper 162-yen range to the 160-yen range, influenced by factors such as intervention caution, a downside miss in U.S. employment statistics, and remarks by the Federal Reserve Chair indicating lower inflation risks. On the other hand, the administration of Prime Minister Shigeru Ishiba has maintained a firm stance of tolerating a weak yen through active fiscal policy and pushback against interest rate hikes, and the yen has weakened again toward the 162-yen range. Aso's remarks, as a party heavyweight, could influence the administration's perception of exchange rates, and future developments will be closely watched.

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