HIGHLIGHTS 2-BOJ Nishimura: yen rise big negative for economy

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HIROSHIMA, Japan, Oct 20 (BestGrowthStock) – Bank of Japan Deputy
Governor Kiyohiko Nishimura said on Wednesday the yen’s recent
rise is a major factor that may drive down the economy through a
worsening of business sentiment.

Following are key quotes from his speech to business leaders
in Hiroshima, western Japan, and at a news conference later. For
a full text of his speech, go to:
http://www.boj.or.jp/en/type/press/koen07/ko1010e.htm

YEN

(from speech)

“The fact that the recent yen appreciation is causing a
deterioration in business sentiment is also a big factor in
putting downward pressure on economic activity …

“There is a risk that the yen’s appreciation will lower
consumer prices not only through worsening economic activity but
also through changes in import prices.”

CAPITAL FLOWS

(from speech)

“Emerging economies are also slowing, although their
adjustments are relatively light. From a longer-term perspective,
there is a strong possibility that those economies will maintain
stable high growth as there is robust potential domestic demand
for spending on durable goods and social infrastructure.

“Some emerging economies have been shifting away from
accommodative policies to prevent overheating. But there are
still many economies whose measures to contain overheating are
not considered to be sufficient. There is a risk that continued
capital inflows will overheat growth in these economies.

“At the same time, since sizable exports have been made from
those countries to the United States, the slowdown in the U.S.
economy may have no small effect on emerging economies, and
such downside risks also require vigilance.”

CHINA’S RATE HIKE

(from news conference)

“Emerging countries, including China, are showing
significantly strong growth and CPI rises seem to be higher than
expected in India and China.

“This seems to be behind the Chinese central bank’s decision
to raise rates. It made a good decision in terms of contributing
to long-term, stable growth.”

BOJ OUTLOOK REPORT

(from news conference)

“Whether to factor in the effects of ‘comprehensive easing’
in our forecasts is up to each board member’s judgment …

“It would be natural to include the impact of a cigarette tax
hike (on Oct. 1) in our CPI forecasts as we have done so on
indirect tax rates.”

The BOJ’s twice-yearly report on the economic outlook on Oct.
28 would show how the board was factoring next year’s revisions
in CPI calculation standards.

In the previous revision to the standard, five years earlier,
the BOJ did not factor in calculation changes in its forecasts,
he said. “Each board member will make their own decision on the
issue this time.”
(Reporting by Rie Ishiguro; Editing by Michael Watson)

HIGHLIGHTS 2-BOJ Nishimura: yen rise big negative for economy