The circulation of Japan’s currency and the bank deposits made a hit record in March, data showed Tuesday which is a sign that households and companies have continued to pile up savings despite signs of improvement in the economy.
This data highlights on how the world’s third-largest economy is struggling to fully emerge from the devastation of the COVID-19 pandemic, with slow vaccine rollouts and sluggish consumption clouding the outlook.
Bank of Japan data showed that Japan’s M3 money stock – or currency in circulation and deposits at financial institutions made a rise of 8% in March from a year earlier to a record 1.49 quadrillion yen ($13.61 trillion), . The increase matched the pace of gain in February.
Takashi Nagahata, head of the BOJ’s economic statistics division, told that “Bank deposits continue to see strong growth. Households are holding off on spending, while companies continue to hoard cash as a precaution.”
Economy of Japan has rebounded from last year’s record postwar slump due to the stronger exports, which led to boost business confidence to pre-pandemic levels. But the analysts expect any recovery to remain modest as a resurgence in COVID-19 infections weighs on household spending.
Elsehwere, Bank of Japan Governor Haruhiko Kuroda made a speech on Tuesday on the benefits of a weak yen, saying it helps manufacturers by inflating the value of profits they earn overseas. Many Japanese manufacturers now produce goods they sell overseas locally, which means a weak yen may not boost export volume as much as it had in the past, Kuroda said.
“But there’s quite a lot of positives for Japan from a weak yen,” as companies earn huge profits overseas and would see their yen-denominated value rise from a lower yen, he told parliament.
Also the Governor told that “The Bank of Japan (BOJ) will continue monetary easing for long period of time via YCC, which had been made more sustainable, effective with the March policy review.”
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