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Executives' Comments  Press Conferences Chairman Tokura's Statements and Comments
at His Press Conference

October 17, 2022

Exchange Rates

The recent exchange rate volatility (yen depreciation) is affecting companies and people's lives. I would like the government to focus on taking firm measures to address the issue.

The current yen depreciation stems from speculative trends driven by the interest rate gap between Japan on the one hand and Europe and the US on the other. Since the US is concentrating on cooling its overheated economy, speculators anticipate that the interest rate gap between Japan and the US will expand. For this reason, the trend toward yen depreciation is likely to continue for some time.

In the short term, urgent issues include measures to ease the burden of electricity and city gas supply charges. Over the medium to long term, Japan needs policies to make its economy more resilient, including security of energy and food supplies. In addition, rather than simply bemoaning yen depreciation, Japan should look for ways to turn it to our advantage in strengthening our economy. Ways of doing this include using yen depreciation to attract inbound tourists, making the most of Japan's soft power among foreigners who have visited our country, and exporting food products.

Controlling exchange rates through monetary policy is not the main tool for curbing yen depreciation. Government intervention in markets is a last resort. A firm stance in addressing excessive exchange rate fluctuations will continue to be vital.

Easing the Burden of City Gas Supply Charges

(In response to a question about the government considering measures to mitigate sudden changes in city gas supply charges) Since Japan has a high proportion of long-term contracts for procurement of LNG, which is the raw material for city gas, procurement prices have been stable. Amid continuing energy price hikes in conjunction with the situation in Russia and Ukraine, and taking into account OPEC+ members' decision to cut production, the government announced its response before demand increases in the winter season, in anticipation of procurement price rises rebounding on city gas supply charges. I welcome the government's encouraging stance in swiftly addressing this issue.

Sources of Revenue for Defense Spending

Geopolitical tensions such as Russia's invasion of Ukraine and confrontation surrounding the Taiwan Strait are giving the people of Japan a deeper understanding of the importance of defense and security. A consensus is forming that steps must be taken to enhance defense capabilities. From a long-term perspective, thorough debate is required on how the population as a whole will shoulder the burden of increased defense spending. Taking account of defense plans, there will be a need for broad discussion considering revenue sources and other key points. I question the appropriateness of focusing solely on corporate tax at this stage.

China-Taiwan Relations

(In response to a question regarding President Xi Jinping's speech at the Communist Party Congress indicating that China will not renounce the option of military force to resolve the Taiwan question) I understand President Xi's statement as indicating adherence to previous policy. Generally, various factors are considered before reaching any decision to exercise military force.

Executives' Comments