Japanese Prime Minister Shinzo Abe said on Friday that Japanese authorities are always watching currencies carefully, adding that foreign exchange rates should reflect economic fundamentals.
"Basically, currency moves should reflect Japan's economic fundamentals. Rapid movements are undesirable and stable moves are desirable," Abe said in a reply to a question about the yen's recent weakness during an appearance on a private broadcaster TV Tokyo. "We have not intervened in the market for a few years now and our stance is that we should let economic fundamentals decide (currency moves)," Abe said.
A weak yen has helped to boost Japanese exports, but some policymakers as well as some business leaders here are wary that there could be a rapid reversal in the yen's trend if currently popular yen carry trades - using yen to buy higher-yielding currencies - unwind sharply. The yen fell to record lows against the euro on Friday as the market continued to focus on the search for higher yields.
Abe also told the network's news programme that Japan's steady recovery has helped push up tax revenues and the government is taking steps to boost Japan's productivity, especially in the services sector.
Asked if that means the government may not need to raise the politically sensitive consumption tax from the current five percent, Abe said: "That's very much possible. I think there may be room to cut more spending."
Earlier on Friday, cabinet ministers reiterated that the government would discuss comprehensive tax reforms - including a possible hike in consumption tax - this autumn, meaning debate will take place only after an election for the parliament's upper house in late July.
Abe said on Thursday that he had never ruled out a hike in the consumption tax, prompting media speculation that Abe might have taken a step forward towards raising the tax. But cabinet ministers said Abe's comment on Thursday was in line with the government's stated plan to discuss tax reforms from the autumn.
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