Japanese Official Says $2.3 Trillion Investment Plan Will Support Yen

Japan's Minister of Economy, Trade and Industry, Shunichi Suzuki, stated that the government's large-scale industrial investment plan will not undermine fiscal stability. Instead, it will provide long-term support for the yen by enhancing economic growth potential and attracting investment. The plan spans 14 years with a total scale of 370 trillion yen (approximately $2.3 trillion), covering 17 key areas including artificial intelligence, semiconductors, and gaming. Suzuki pointed out that support for strategic industries such as AI and semiconductors is essential for improving productivity and enhancing global competitiveness. As funds flow into Japan and yen-denominated assets, demand for the yen will increase. Addressing concerns about fiscal expansion, Suzuki emphasized that Japan's fiscal policy is not as aggressive as some believe, and the government will focus on indicators like the debt-to-GDP ratio rather than merely pursuing a balanced annual budget. Additionally, Prime Minister Fumio Kishida plans to implement a two-year consumption tax reduction policy, expected to cost about 5 trillion yen annually, and Suzuki stated that raising funds is not difficult. The market is paying attention to the policy coordination between the Japanese government and the central bank, with Suzuki supporting the central bank's independent decision-making and respecting its autonomy. Expectations are rising for further interest rate hikes by the Bank of Japan in September or October.