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By Bloomberg

The yen climbed for a third day against the dollar as an adviser to Japan’s prime minister added his voice to the chorus warning that the currency has weakened far enough.

An exchange rate of 105 per dollar would be “appropriate,” Koichi Hamada, a consultant to Shinzo Abe on economic policy, said in an interview with Bloomberg Tuesday, echoing comments he made on BS Fuji television Monday evening in Tokyo. He told Bloomberg he doesn’t think the yen will fall much further, and 125 per dollar wouldn’t be justified. Hamada said in the television interview that there’s “no need to force” inflation to the Bank of Japan’s 2 percent target.

“The fact he specified the 105 level got a reaction from the market,” said Yuji Saito, director of foreign exchange at Credit Agricole SA in Tokyo, referring to Hamada. “His comments on the inflation target chipped away at any expectations for additional easing this month, mainly among foreign investors, adding some pressure for yen buying.”

The yen strengthened as much as 0.3 percent to 119.74 per dollar from Monday, before trading at 119.92 at 6:01 a.m. in London. It gained as much as 0.4 percent to 126.50 per euro, the strongest since June 2013.

Japan’s currency has tumbled at least 11 percent versus the dollar in each of the past three years, before struggling to fall further in 2015. It has been little changed since Dec. 31, fluctuating between 115.86 reached Jan. 16 and a 7 1/2-year low of 122.03 touched on March 10.

Chorus Builds

A growing number of officials are expressing concern about the yen’s 33 percent drop against the dollar over the past three years, the most among major currencies. Tomomi Inada, the policy chief in Abe’s Liberal Democratic Party, said last month the negative impact of the weakening yen on small companies must be addressed. Some BOJ policy makers view an expansion of stimulus as counterproductive for now, people familiar with talks at the central bank told Bloomberg in February.

Finance Minister Taro Aso declined to comment Tuesday on the yen’s level, while Economy Minister Akira Amari said the important point is to avoid sharp moves up and down.

Some 282 failed Japanese companies cited currency depreciation as a contributing factor in their bankruptcies last year, more than double the 139 cases in 2013. That was even as the total number of failures fell to the lowest since 1990.

Hamada points to purchasing power parity, which takes into account relative price levels in different countries, for his assessment of the yen’s weakness. The currency is 32 percent undervalued versus the dollar in terms of consumer prices, the most among major currencies after Sweden’s krona, according to data compiled by Bloomberg.

140 Needed

Economists estimate the yen must weaken to 140 per dollar for BOJ Governor Haruhiko Kuroda to meet his 2 percent inflation goal. Consumer-price gains have been moderating for close to a year, with the BOJ’s preferred measure flatlining in February.

Kuroda said Monday that monetary stimulus was having its intended effects and would continue until inflation is stable at 2 percent.

Three economists among 34 surveyed by Bloomberg between March 31 and April 3 predicted the BOJ will expand its asset- purchase program at its meeting on April 30. A total of 22 expect action by the end of October, while 10 forecast no additional easing.

Commonwealth Bank of Australia, which didn’t participate in the poll, is sticking with its call for expanded stimulus as early as this month in spite of Hamada’s comments.

The Sydney-based lender predicts the yen will weaken to 135 per dollar at year-end, the most bearish call among more than 60 analysts surveyed by Bloomberg. The median estimate is for a depreciation to 125 per dollar.

“Kuroda’s are probably the more pertinent comments to be focusing on, because he’s in control of the BOJ, not Mr. Hamada,” said Commonwealth Bank strategist Joseph Capurso. “They just haven’t done enough monetary easing to get inflation back up again.”