Japan's ruling party lawmaker says yen is undervalued

According to Japanese lawmaker Satsuki Katayama, the country's economic indicators imply that the real value of the yen is closer to 120–130 per dollar than the current level of 150.

The Japanese currency fell to the aforementioned mark this week. It happened against the backdrop of several factors, Reuters reports. They include the release of positive data in the United States, cautious optimism about the US tariff policy and expectations that the Bank of Japan will not rush to raise interest rates.

The weak yen, according to Reuters, is accelerating inflation in the country and increasing the cost of imports. This, in turn, has a negative impact on domestic consumption.

Katayama said that Japan's ruling party will propose an expansion of the tax-free investment program. The aim is to encourage individual investors to buy shares in local companies. This will slow the flow of funds abroad and support the yen, the official said.

Currently, high-yielding overseas stocks dominate the list of popular investment products in Japan. According to analysts polled by Reuters, this is one of the factors explaining the yen's continued weakness.