Fitch affirms Japan with ‘A’ rating, negative outlook
As per the latest guidance from the global rating giant Fitch, “Japan's long-term foreign currency Issuer Default Rating (IDR) is at 'A' with a negative outlook.”
Key quotes (from Fitch)
Japan's ratings balance the strengths of an advanced and wealthy economy, with correspondingly robust governance standards and public institutions, against weak medium-term growth prospects and very high public debt.
The government's financing capacity is supported by the central bank's monetary strategy, which generates very low-interest rates along the sovereign's yield curve, and the home bias of Japanese private-sector investors.
Fitch has retained a Negative Outlook on Japan's ratings, given uncertainty about the medium-term macroeconomic and fiscal outlook from the continuing pandemic.
Fitch expects growth of 2.5% in 2021 and 3.0% in 2022, as the economy recovers from a 4.6% contraction in 2020. The recovery has been delayed by weak domestic demand owing to coronavirus containment measures, but will continue to be supported by the government's large stimulus measures and a continued strong export and manufacturing performance.
FX reaction
The news fails to impress USD/JPY traders as the quote remains unchanged around 110.40 by the press time.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
