Prime Minister Shinzo Abe¡¯s weakening of the yen through stimulus measures may be in danger of becoming too much of a good thing, according to Fukoku Capital Management Inc.
¡°There¡¯s the potential for a bad kind of yen depreciation if the Bank of Japan buys too much government debt, without any benefit to the real economy,¡± Yuuki Sakurai, president of Fukoku Capital, which manages ?1.8 trillion, said in a recent interview in Tokyo. ¡°If the yen keeps weakening, it¡¯s not good for the current account,¡± he said without giving a specific currency level.
Fukoku¡¯s Sakurai joins Kokusai Asset Management Co., which manages Japan¡¯s biggest bond fund, in warning further depreciation could hinder rather than help the recovery. The yen tumbled 18 percent versus the dollar last year, boosting exporters¡¯ earnings and fueling a 51 percent stock rally. The nation also recorded a record trade deficit as energy imports swelled while nuclear reactors remained idle from the Fukushima meltdowns in March 2011.
¡°In the past, a weaker yen would make the Japanese economy as a whole more profitable,¡± Masataka Horii, who runs the ?1.3 trillion Global Sovereign Open Fund at Kokusai, said in a recent interview in Tokyo.
¡°But now that the amount of imports is bigger, the weaker yen is problematic.¡±
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