NEW YORK, June 28 (Reuters) - Recent volatility in financial markets is no cause for concern and does not threaten Japan’s aggressive efforts to revive the economy after decades of deflation, an advisor to Prime Minister Shinzo Abe said on Friday.
After surging to a 5-1/2-year high, Japan’s Nikkei stock index has slipped in recent weeks, causing some to worry about the long-term ability of aggressive monetary and fiscal policies to revive growth.
But Koichi Hamada told a gathering at the Japan Society in New York that “stock markets are by nature volatile and currencies often overshoot,” adding that the stock market is still more than 30 percent higher than it was before the Abe government announced its reforms.
Aiming to revive the economy after decades of falling prices and stagnant growth, the Bank of Japan launched an aggressive course of monetary easing in April, pledging to pour about $1.4 trillion into the financial system by the end of 2014.
This shock therapy also weakened the yen, which in May fell to a 4-1/2-year low near 104 per dollar, though it has since strengthened and was around 99 per dollar on Friday. A weaker yen makes Japanese goods less costly in overseas markets.