[TOKYO] A key economic adviser to Japanese Prime Minister Shinzo Abe said on Tuesday that it remains to be seen whether weakness in the yen will be severe enough to damage Japan's economy, which faces higher resource import costs after the dollar hit an eight-year high.
The dollar on Tuesday rose as high as 122.04 yen, the highest since July 2007, and hit a 12-year peak against the euro, gaining strength on expectations that the Federal Reserve may begin raising interest rates as early as this summer.
Etsuro Honda, a University of Shizuoka professor and a leading architect of Abe's reflationary economic policy, said Abe was closely watching yen moves but added that the dollar around 120 yen was not problematic for the economy as a whole.
"It would not be good if (the yen) were to deviate from the fundamentals," Mr Honda told Reuters.
Honda also said a slump in crude oil prices to about US$50 per barrel was not a concern and he hoped they would remain around that level, although a further slide may wreak havoc for oil-producing nations which would in turn hurt the global economy.