This month, the Japanese yen’s exchange rate against the US dollar fell below ¥125, a 13-year low, before rebounding to nearly ¥122 following a statement by Bank of Japan Governor Haruhiko Kuroda that he did not expect further depreciation. But, as Kuroda later clarified, Japan’s monetary policymakers do not seek to predict, much less control, exchange-rate movements. Instead, the BOJ’s goal – like that of any effective central bank – is to ensure the right combination of employment and inflation. Of course, a country’s monetary policy does affect exchange rates in the short term. But it does so only in relation to ... (full story)