A weak yen is positive for Japan's economy as it helps companies boost wages and investment by increasing their profits, an adviser to Prime Minister Shinzo Abe said on Thursday. US President-elect Donald Trump's plans for infrastructure spending and tax cuts are also appealing, because this would help the US economy grow and in turn benefit Japan's economy, Yasutoshi Nishimura told Reuters in an interview.
"I won't comment on currency levels. But a weak yen generally helps lift corporate profits," Nishimura said. The yen has fallen to a 10-month low versus the dollar after the US Federal Reserve raised interest rates and signaled rates will rise three times next year, up from two rate hikes flagged at its previous meeting.
The yen has tumbled 11 percent versus the dollar since Trump's surprise election victory last month, partly due to expectations that the new administration's stimulus plans would cause consumer prices to rise at a quicker pace, forcing interest rates higher, resulting in a stronger dollar. Japanese government officials and companies tend to welcome a weak currency because it pushes up exporters' earnings and contributes to inflation by raising import prices. However, the yen's fall in the past month has been so rapid that some traders and economists are worried about a sudden reversal or excess volatility.
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