East Asia Econ

Region – consumption and exchange rates

Wage growth, household savings and income levels are huge issues across the region. This slidepack shows how these are linked with exchange rates to lay out the outlook for currencies in China, Japan, Korea and Taiwan.

Paul Cavey

Sep 23, 2025 • 3 min read

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Japan – hemmed in

With JPY depreciation unpopular and the cycle intact, it is unlikely that the Takaichi administration can really make the BOJ hike even more slowly than it has been. The policy that would work better for defusing the cost of living crisis would be fiscal loosening to raise household incomes.

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Japan – wage growth a bit better

One of the data points that challenges the BOJ's confidence on wage-price developments is slowing part-time wage growth. That ticked up in August, as did base pay for full-time workers. By historical standards, both are high, but growth in overall earnings growth continues to trail price inflation.

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East Asia Today

Today's data releases show fx reserves in China rising, providing further evidence of the resumption of capital inflows. In Japan, the BOJ's preferred measure of consumption weakened in August. In September, the monetary base also fell, but exports look to have stabilised.