Japan must restore fiscal discipline to brace for rising interest rates, and to ensure market trust in the yen is maintained, an influential ruling party panel said in a draft proposal on fiscal policy obtained by Reuters on Wednesday.
The proposal, which will be reflected in the government's mid-term fiscal blueprint due out next month, underscores how a weak yen and an exit from ultra-low interest rates are piling pressure on Japan to rein in its huge public debt.
"As global economic developments experience big changes, a strong yen can no longer be taken for granted," the panel said in the draft proposal, adding that Japan must be mindful of the risk of too-loose fiscal policy eroding market trust in the yen.