There are machinations at Japan Inc. Firms are dissatisfied with Bank of Japan easy policy (its probably more precise to say firms are dissatisfied with the rapidly weakening yen). The BOJ, meanwhile, has shown little sign of wavering. That may have to change.

The inflation report coming up today is likely to be a big one. A focal point. Check this out:

I suspect if inflation in Japan does move higher it will, for real this time. be transitory. Temporary high inflation will not be enough to move the BOJ. But I suspect other pressures may be brought to bear on Bank leadership.

Anyway, comment out of Japan Ministry of Finance:

Japanese Finance Minister Suzuki

  • Says explained to G7 about recent sharp forex moves
  • Says told G7 important to reconfirm G7 agreement on forex
  • Says told G7 Japan will respond appropriately to forex moves based on G7 agreement
  • Says hopes Japan’s view on FX is taken into account in tomorrow’s G7 communique
  • Says many members voiced concern over inflation risk
  • Says no discussion today on US Proposal to impose tariff on Russian oil

Senior Japan finance ministry official:

  • Says Japan is communicating closely with G7 counterparts on forex on daily basis
  • Says G7 policymakers must ensure inflation expectations remain anchored
  • When interest rates are rising so much, policymakers must be mindful of various risks including fallout for emerging markets
  • Says today's G7 meeting did not discuss much risk of stagflation or risks from dollar's recent rises
  • Says no plan to hold Japan, US Bilateral finance leaders' meeting tomorrow

Efforts from the Ministry and also from the Bank of Japan have, so far, driven USD/JPY off from its lofty heights somewhat:

usdyen 20 May 2022