ADB President warns that slow rate hikes in Japan will put pressure on the yen

According to Golden Ten Data on April 19, Asian Development Bank President Masatsugu Asakawa stated that if the market believes the Bank of Japan is acting too slowly in responding to inflation risks, the yen could face further pressure. Masatsugu Asakawa, who previously served as Japan’s top foreign exchange diplomat, told reporters on Friday evening that investors buy U.S. dollars during periods of global tension partly because the U.S. is an oil exporter, but even if those positions are unwound, it will be difficult for the yen to rise significantly against the dollar. He said: “The biggest reason is the interest rate differential. As the market pays especially close attention to potential Federal Reserve actions, if many people believe the Bank of Japan will lag behind the curve in addressing inflation risks, the yen will be left behind.” While attending the International Monetary Fund and World Bank Group meetings in Washington this week, Masatsugu Asakawa also mentioned that if investors are concerned about Japan’s fiscal sustainability, they may also sell off the yen.