Former Bank of Japan Governor Haruhiko Kuroda said the yen's depreciation has gone too far and a rate of 130 yen per U.S. dollar is appropriate [1].

Kuroda's assessment comes as Japan grapples with a complex economic environment where inflation and stagnation coexist. His perspective is significant because it suggests that current market valuations of the yen are detached from economic fundamentals, potentially harming the broader economy.

Speaking at an event in Tokyo, Kuroda said the current currency trend is excessive [2]. He said that a rate of 130 yen per dollar would be a better target for the currency [1]. While he acknowledged that the amount of funds effectively available to users has increased, he remained critical of the volatility in the exchange market [3].

Addressing the risk of stagflation, Kuroda said that coordination between the Japanese government and the Bank of Japan is necessary to manage the simultaneous pressures of inflation and economic stagnation [4]. He said that this joint effort is essential to stabilize the economy and protect purchasing power.

Despite the economic headwinds, Kuroda said that further fiscal spending is not required at this time [3]. He focused instead on the need for strategic policy alignment rather than simply increasing government expenditure.

There are differing views on what is driving the current currency trends. Some reports suggest that statements from Prime Minister Takaichi have contributed to the yen's decline, while other accounts indicate that market factors, rather than specific policy triggers, are the primary drivers of the depreciation [5, 6].

Earlier this year, the Ministry of Internal Affairs and Communications reported a year-on-year increase of 1.3% in the general consumer price index as of March 24, 2026 [7].

“"Too far, no matter how you look at it."”

Kuroda's call for a 130-yen floor indicates a belief that the currency's current weakness is a liability rather than an asset for exports. By rejecting further fiscal spending while demanding tighter coordination between the central bank and the government, he is advocating for a precision-based approach to prevent stagflation from becoming a permanent fixture of the Japanese economy.