Greater purchasing power seen for Qatari riyal against Japanese yen

Fiscal and monetary policy makers in Japan ignored the gradual tightening policies pursued by the US Federal Reserve in raising interest rates, which widened the gap between monetary policy in the two countries and led to a record drop in the Japanese yen to its lowest level in 20 years, recording ¥129.43 against the dollar.In an exclusive statement to Qatar News Agency, economic expert and CEO of Al Dar Exchange Company Jumah al-Maadhadi said the decline of the Japanese yen against the dollar reaps its benefits to the Qatari private sector, the categories of Qatari suppliers and tourists, pointing out that they benefited from the strength of the riyal against the yen, which is reflected in their chances of importing lower prices due to the decline in their value against the dollar, as well as the attractiveness of foreign investment, which opens investment opportunities in countries whose currencies have witnessed a decline against the dollar.Al-Maadhadi added that the Qatari riyal's link to the US dollar and the yen's decline against the dollar would mean the riyal gaining additional strength against the yen. He pointed out that the riyal is reaping the strength of the US dollar after the recent policies of raising US interest rates, and that the depreciation of the yen will be in the interest of everyone who visits Japan in terms of obtaining services at lower prices.Al-Maadhadi indicated that the Qatari riyal will reap strong dollar gains against all currencies that fell against the dollar, especially after the Japanese yen's fall to record levels. Therefore, dealers and trading partners with Japan, whether individuals or companies, especially consumers, investors and companies, will benefit in the long term, which provides them with greater investment opportunities.With the increasing conflict between the Bank of Japan, which aims to continue the monetary easing policy, and the plans of the US Federal Reserve to accelerate the pace of raising interest rates more than once this year to face the high levels of inflation, the price gap between the two currencies will widen and put more pressure on the Japanese yen, which has lost about 4.5 % against the dollar since the beginning of April.Specialist in monetary economics Dr Layal Mansour said in a statement to QNA that there are internal and external factors that lead to a depreciation of the currency.The internal factors are monetary expansion policies or the so-called quantitative easing policies such as those followed by the Bank of Japan and reducing the interest rate to its lowest levels to stimulate economic growth, while the external factors lie in imported inflation such as the current rise in energy and food prices and others, she said.The decline of the yen against the US dollar has an impact on the Japanese economy and the countries that deal with Japan, as the decline in the exchange rate of the Japanese currency came due to investors scrambling for the US dollar with the increase in US Treasury bond yields, which raised concerns about a widening monetary policy gap between the BoJ and the US Federal Reserve.She pointed out that the depreciation of the yen will improve the competitiveness of Japanese products abroad, but in return it will result in a higher cost of obtaining imported raw materials and production requirements, pointing out that the impact is not confined to Japan alone and may extend to its trading partners, especially since the Japanese economy is considered one of the heavyweight, and Japan has extensive economic relations with most countries of the world.Regarding the negative repercussions of the decline of the Japanese yen against the dollar, Mansour said that the most prominent negative effects lie in the impact on the returns of companies that have investments in the Japanese market, as well as investments in stocks and bonds, although they may achieve profits and record stability. But in fact, they will decrease due to the devaluation of the currency after the decline (the decline in the exchange rate of the yen). BoJ Haruhiko Kuroda said that the bank should continue its monetary stimulus policy, given the calming inflation dynamics in the country compared to the United States.In a speech delivered at Columbia University in New York, Kuroda said that the BoJ should persistently continue the current aggressive monetary easing policy, to achieve price stability with a target inflation rate of 2 %.Japan is a major trading partner of the State of Qatar, and one of the major importers of liquefied natural gas (LNG). The exchange rate fluctuation in any country is one of the problems facing business and economic activities in various fields, Therefore, the process of exchange rate stability is an important factor for investment and economic stability.International companies that expand in more than one country and operate in many countries at the same time are more vulnerable to exchange rate fluctuations, which makes them exposed to risks outside their control.The BoJ is scheduled to hold its monetary policy meeting next Thursday, amid expectations that it will keep its accommodative monetary policy unchanged, at a time when the Japanese yen recorded a sharp decline against the dollar this week, as it fell to its lowest level in 20 years.