TOKYO — The yen's sharp rise against the U.S. dollar since late 1985 may have hurt Japanese exports, but it also helped spur the domestic economy by keeping down commodity prices and boosting personal spending, the Bank of Japan said Tuesday.
The central bank said that in late fiscal 1986, which ended March 31 this year, the nation's economic growth had slowed because of the strong yen.
But in fiscal 1987, it gradually became clear that the nation's economy, led by domestic demand, was recovering from the business slump as low prices spurred personal spending and low interest rates helped non-manufacturing sectors, the bank said.
It said low prices resulted from the lower costs, in yen terms, for imported raw materials. In late 1985, 1,000 yen would buy $4.13 worth of foreign goods. On Tuesday, it would buy $7.48 worth.