Japan

The Bank of Japan said Tuesday that it would tweak its bond buying policies and step up asset purchases — a surprise move as Japan faces economic pressure from rising inflation and a weak yen, the New York Times reported. The change was seen as a sign that Japan might relax its adherence to ultralow interest rates. That commitment has made the country a global outlier as other central banks around the world have pushed up their rates in an effort to battle inflation.

Japan has kept interest rates below zero this year, where they have been since 2016, even as other major central banks sharply raise their own, the Wall Street Journal reported. The country now finds itself in a dilemma. Inflation is rising, the yen plummeting, and some economists and corporate executives blame the negative rate policy for eroded competitiveness and undisciplined government spending. All that has put pressure on the Bank of Japan to finally raise rates.

Japan's imports surged in November, outpacing exports and resulting in the 16th straight month of trade deficits, as the spectre of a global slowdown added to the country's worsening terms of trade, Reuters reported. Imports rose 30.3% year-on-year in November, versus the 27.0% increase expected by economists and a 53.5% jump in October, Ministry of Finance (MOF) data showed on Thursday. The surge was a record for the month of November and led by crude oil, coal and liquefied natural gas.

The Bank of Japan may abandon its 10-year bond yield cap as early as next year on growing prospects that inflation and wages will overshoot expectations, said Takeo Hoshi, an academic with close ties to incumbent central bank policymakers, Reuters reported. The BOJ must maintain an ultraloose policy for the time being to convince the public that it is serious about reflating the economy long enough to generate sustained inflation, said Hoshi, an economics professor at the University of Tokyo.

The Japanese subsidiary of Sam Bankman-Fried’s failed crypto empire FTX has put together a draft plan for clients to withdraw funds, in what would be one of the rare cases of investors getting money back from the collapsed exchange, Bloomberg News reported. The proposal, which has yet to be finalized, centers on using a platform called Liquid to facilitate the return of assets starting in January. Bankman-Fried’s sprawling tangle of FTX group companies slid into a chaotic bankruptcy on Nov.

User assets at the Japanese arm of FTX Trading have stayed safely apart from the rest of the collapsing cryptocurrency exchange group, and "we're working toward returning them as our top priority," FTX Japan Chief Operations Officer Seth Melamed told Nikkei on Tuesday. Withdrawals at FTX Japan remain halted amid the turmoil engulfing Bahamas-based parent FTX Trading, which is undergoing Chapter 11 bankruptcy proceedings in the U.S. The Japanese company has roughly 19 billion yen ($134 million) in user assets, including dormant accounts.

South Korea should avoid following Japan’s lead of using fiscal and monetary stimulus to combat the challenges of an aging economy, central bank Governor Rhee Chang-yong said, urging reforms instead to boost fertility, Bloomberg News reported. Aging is a rising concern in the developed world and Korea is among the hardest-hit together with Japan. South Korea shattered its own record for the world’s lowest fertility rate last year, adding to long-term pressure on policy makers to keep interest rates low and fiscal stimulus ample to boost growth.

Japan’s inflation hit its fastest clip in 40 years in October, an outcome that puts the central bank in an even more awkward position as it tries to explain the need to stick with monetary stimulus to pursue stable price growth, Bloomberg News reported. Consumer prices excluding fresh food climbed 3.6% in October from a year ago, with the acceleration driven by processed food and the fading impact of mobile phone fee cuts, the internal affairs ministry reported Friday. The reading outpaced a 3.5% forecast by analysts and marks the fastest price growth since 1982.

Japan’s economy, the world’s third largest, unexpectedly shrank in the three-month period from July to September, as a weak yen and high inflation eroded Japanese consumers’ buying power and sapped businesses’ strength, the New York Times reported. The economy contracted at an annualized rate of 1.2 percent during the third quarter, government data showed on Tuesday, ending nine months of growth and setting back the country’s recovery just as Japan was adjusting to life with looser coronavirus restrictions.