00:00Mark Oswald is the Chief Economist and Global Strategist at ADM Investor Services International.
00:07There is, yes, I mean the most important one and I think the messaging from the public on this was very clear
00:14is they want to see swift, decisive action from Takeichi and Katayama, Finance Minister,
00:21to deal with the cost of living type crisis and reduce the sales tax on food from the current 8
00:29to zero and the plan at the moment is to suspend that for two years, which creates a problem further along the line
00:38because reintroducing it obviously would reintroduce a similar sort of problem.
00:43The inflation problem isn't going to resolve itself in a great hurry, particularly if the yen remains as weak as it is.
00:50So let's talk about the yen. There have been various talking down currencies, a lot of rhetoric going on here.
00:58What's your take?
01:00Well, this is the bit which is interesting. I mean, the Ministry of Finance in Japan is always in charge of the yen
01:06rather than the Bank of Japan. The Bank of Japan is merely its agent.
01:11And Takeichi, while talking up the benefits of a weak yen, is not on the same page of the book as Finance Minister Katayama,
01:21who has previously said that she thinks fair value for dollar yen is somewhere in the 125 to 30 area.
01:28So we shall have to see what that implies in terms of what the Bank of Japan does.
01:34If it remains behind the curve on raising interest rates, then the yen is going to weaken.
01:40And, you know, as we've seen before, the Bank of Japan will then have to be, well, effectively, they will have to green light
01:47at swifter rate hikes than has been the case of late.
01:52Well, dollar yen, a really important barometer for the health of global markets and the global economy.
01:58What do you think the international financial community is looking at from Japan now for a little bit more certainty and a more even keel?
02:09Well, they would like to make sure that, as Finance Minister Katayama said, they won't issue deficit financing,
02:16extra deficit financing bonds to cover the cost of the cut to food sales tax.
02:23She said she will, but we shall see how that pans out.
02:26They're also going to be looking at, you know, whether there's going to be any intervention on dollar yen given its current weakness
02:34and how they might deploy their foreign exchange reserves, probably not by selling them,
02:40but by perhaps securitizing them in some form or of another to finance the, you know, the ambitious projects that Takeichi has.
02:50So, let's see.
02:52Let's see.
02:54Let's see.
02:56Let's see.
02:58Let's see.
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