The Bank of Japan faces the risk of not stepping out of its broad monetary stimulus program if the JPY continues to rise sharply despite strong economic growth. Also, weak inflation could make the Bank of Japan hesitant in easing the massive stimulus program.
Although inflation is far from the Bank of Japan's target of 2%, its policy has led to a desirable yen depreciation. Japanese Yen movements are a very important factor for the Bank of Japan's policy.
Although the bank is not targeting the yen's moves officially, as it may face currency manipulation charges from the G-20. Controlling the sudden rise of yen has been a priority for Japan's policymakers in support of an export-dependent economy.
