By Leika Kihara
TOKYO (Reuters) -A senior Bank of Japan (BOJ) official on Monday warned that excessive volatility in yen moves could hurt growth, after the currency’s slide below the key 125 yen threshold on the dollar raised concerns about broader risks to the import-reliant economy.
Shinichi Uchida, the BOJ’s executive director, also said the central bank will maintain ultra-loose monetary policy as recent rises in inflation were driven by fuel costs and could hurt Japan’s fragile economic recovery.
“It’s desirable for currency rates to move stably reflecting economic and financial fundamentals. That’s a policy confirmed by G7 and G20 countries,” Uchida told parliament, when asked about the impact of the yen’s recent declines on the economy.
“Short-term, excess volatility in currency moves could heighten uncertainty over the outlook and make it difficult for companies to create business plans,” Uchida said.
The dollar briefly rose above 125 yen on Monday, the first time since March 28, as prospects of aggressive interest rate hikes by the Federal Reserve highlighted the widening rate differential between the United States and Japan.
(Reporting by Leika Kihara; Editing by Christopher Cushing & Shri Navaratnam)
