Moreover, an improvement in corporate profits will increase household income and this in turn is expected to boost private consumption. However, the pace of recovery in household income will be modest for the time being, since firms’ perceptions of excess employment still persist, and thus significant changes have not been observed in their efforts to reduce personnel expenses.
On the basis of the lessons learned from the crisis we believe that we will need to maintain a larger foreign-exchange reserve than in recent years. Nevertheless, it should be borne in mind that our target is to keep the exchange rate stable.