Tetsushi and Daniel Leussink

TOKYO, Reuters -Japanese policymakers maintained their traditional line on yen weakness Wednesday. They stated that fast moves are undesirable but confounded hopes they might increase warnings about the declining currency, as it plummeted to new 20-year lows.

According to various macro models, the weakening yen is good for the economy, Haruhiko Kuroda, Bank of Japan Governor, stated Wednesday that he believes it. He reiterated his position in parliament.

Shunichi Suzuki, Finance Minister, stated in Parliament that the weakening yen can have both positive and negative effects on the economy. However, it may be negative if wages stagnant which could cause potential harm to families due to higher living costs.

The yen was less than 133 against the dollar Tuesday’s slump below 143 to the euro was a 7-year low. A likely rate hike by the European Central Bank will leave Japan, which is the main central bank that has maintained an easy monetary policy in face of rising inflation.

There has been speculation on financial markets that Japan might intervene in order to stop the yen’s weakness. This is a shift from Japan’s traditional position of weakening the yen.

Japan hasn’t intervened in currency markets since trying to curb a surge of the yen in March 2011 after the devastation caused by the tsunami and earthquake in Japan.

In the past, currency policymakers have accelerated their warnings to the market, which has drawn attention to them.

“There isn’t a clear threshold when policymakers might escalate warnings about weak yen. “They may wait until it reaches 140 yen,” Daisuke Karakama is chief market economist for Mizuho Bank.

With voters’ support remaining high, policymakers don’t seem to be complacent. So they didn’t want Kuroda speaking unnecessarily to upend the ship.

Kuroda was defensive Wednesday about a statement he made earlier this year that Japanese families were accepting higher prices.

After being criticised for his insensitivity towards the effects of rising living costs on consumers, he retracted the comments in front of parliament.

He said, “My statement that household are accepting price increases was inappropriate”

It is important for companies with higher profits to increase capital expenditures and wages. This will create a positive cycle that leads to greater incomes, which in turn drives more spending.

Kuroda indicated that U.S. rate rises will have little impact on dollar moves unless they’re stronger than anticipated, as per a recorded interview with the Financial Times.