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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The yen fell to a new 34-year low on Friday after the Bank of Japan stuck to its dovish tone, holding interest rates near zero despite rising pressure on the central bank to tighten its policy and prop up the ailing currency.

The Japanese currency fell to ¥156.71 against the dollar after the BoJ unanimously agreed to continue guiding its overnight interest rate within a range of about zero to 0.1 per cent.

In March, the central bank ended its negative interest rate policy, raising borrowing costs for the first time since 2007.

In the wake of its historic shift away from ultra-loose monetary policy, governor Kazuo Ueda indicated he would like to move gradually to raise rates.

But his position has been complicated by the yen’s depreciation and signals that the US Federal Reserve will keep interest rates high to tame inflation.

Investors had not expected the BoJ to change its policy this week, with the focus on whether Ueda would strike a hawkish tone regarding future rate rises to slow the yen’s decline.

Instead, Ueda said at a news conference on Friday that the central bank’s board members judged there was “no major impact” from the weaker yen on underlying inflation for now.

“Currency rates is not a target of monetary policy to directly control,” he said. “But currency volatility could be an important factor in impacting the economy and prices. If the impact on underlying inflation becomes too big to ignore, it may be a reason to adjust monetary policy.”

The yen held steady at about ¥155.55 a dollar in morning trading but weakened sharply within 10 minutes of the BoJ’s announcement as traders resumed bets that the US-Japan rate differential would continue to apply downward pressure on the Japanese currency.

The Nikkei 225 stock index briefly rose more than 1 per cent after the announcement. It closed up 0.8 per cent on Friday.

The BoJ forecast “core-core” inflation, a closely watched measure that strips out volatile food and energy prices, would remain near its 2 per cent target for the next three years. Ueda added that the central bank would raise rates or adjust the degree of its easing measures if prices rose in line with its outlook.

In a single-page statement, the BoJ also noted that it would continue to purchase Japanese government bonds in line with its March decision but dropped a previous footnote on how much it would buy each month.

“There is no intention by the BoJ to stop the yen’s decline, at least looking at its statement and its outlook report,” said UBS economist Masamichi Adachi. “The finance ministry will have to act [to stem the yen weakness].

“It would have been more effective if both the government and the BoJ faced the same direction,” he added.

The BoJ has long struggled to maintain price rises at sustainable levels to keep the economy out of deflation. While domestic consumption remains weak, the falling yen is expected to fuel inflation in the months ahead by increasing the cost of imported goods.

Investors expect the BoJ to raise rates in July at the earliest if the bank confirms increases in service inflation and real wages, which would help boost consumption. Following the dovish tone on Friday, however, Adachi said he does not expect the next rate rise until October.

“Markets remain on high alert for any indication of whether the yen’s current weakness will be interpreted as a lasting inflationary signal,” said Naomi Fink, global strategist at Nikko Asset Management.

“The BoJ however is likelier to find any knock-on impact from yen weakness upon inflation as more concerning than short-term currency moves.”

CNN anchor Kaitlan Collins pressed an attorney for former President Trump on a line of questioning by Supreme Court Justice Elena Kagan in the former president’s presidential immunity case at the Supreme Court Thursday.

“What are the circumstances where ordering a military coup is an official act of the presidency?” Collins said, referring to a back-and-forth between Kagan and Trump lawyer D. John Sauer in which she questioned him on presidential immunity in the case of a president ordering the military to stage a coup.

“When you’re talking about official acts, you don’t look to intent, you don’t look to purpose, you look to their underlying character,” Scharf responded. “So if that were — if that sort of situation were to unfold using the official powers of the president, you could see there being an aspect of officialness to that.”

The two went back and forth, and Collins later remarked that Sharf was making “a pretty brazen argument, that military coups could potentially be official acts.”

Sharf retorted that the argument is not meant to justify such things, but to define the scope of immunity presidents have been acting in office.

“Just because a military coup or any of these sort of parade of horribles could constitute an official act doesn’t mean that they’re right, doesn’t mean that they would be allowed under a constitutional system and doesn’t mean that we’re in any way shape or form justifying that,” he said. “What we’re talking about here, though, is the scope of immunity that presidents need to be able to rely on to discharge their core article to responsibilities as president.”

When asked about if a president ordering “the military to stage a coup” is an “official act” by Kagan on Thursday as the Supreme Court held a hearing on Trump’s claims of immunity, Sauer responded that “it could well be.”

On the same day of the Supreme Court hearing, the former president was in court in New York for his hush money case, which began last week. The case marks the first criminal trial of a former American president. He has been charged with 34 counts of falsifying business records in relation to reimbursements to his attorney at the time, Michael Cohen, who paid an adult film actor $130,000 prior to the 2016 election to keep quiet about an alleged affair with Trump, which he denies.

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

China’s control over a crucial battery material will make it nearly impossible for any electric-vehicle makers to qualify for the subsidy scheme at the heart of President Joe Biden’s flagship green tech legislation, South Korea has warned.

Biden’s Inflation Reduction Act seeks to eliminate “foreign entities of concern” — which include companies with close ties to Beijing — from the US EV supply chain, with restrictions due to come into force on January 1 2025.

But Chinese companies control more than 99 per of the global market for battery-grade graphite and 69 per cent of the market for synthetic graphite used in battery anodes, according to consultancy Benchmark Minerals Intelligence.

Without an exemption to the FEOC rules for battery makers to secure graphite from Chinese suppliers, it is possible that no vehicles will qualify for the generous tax credits that the Biden administration is offering EV buyers, Ahn Duk-geun, South Korea’s minister of trade, industry and energy, has warned.

“Unless they make some kind of exemption or transition period, the whole [EV subsidy] regime will collapse,” Ahn told the Financial Times, adding that Seoul had raised the issue with the US commerce department. “I believe they will try to find a way to somehow take this market reality into consideration.”

South Korean companies have already committed to investing tens of billions of dollars in advanced technology facilities in the US in order to take advantage of expansive subsidies for semiconductor and battery manufacturing.

The US announced last week that it would offer up to $6.4bn in federal subsidies to South Korean tech giant Samsung Electronics, which is investing $40bn in its Texas facilities for cutting-edge logic chips, advanced packaging and research and development on next-generation chip technologies. SK Hynix, a maker of memory chips, is building an advanced packaging facility in Indiana.

South Korean battery makers LG Energy Solution, SK On and Samsung SDI, which have all received billions of dollars under the IRA, are projected to account for 44 per cent of North America’s total battery capacity by 2030, according to Benchmark.

But he noted that future US administrations could cause “huge trouble” for South Korean companies by modifying or repealing elements of the IRA, which Republican presidential candidate Donald Trump has threatened to gut in favour of increased fossil fuel investment. Beijing also introduced controls on graphite exports last year.

The Korea Semiconductor Industry Association has expressed concern that South Korean chipmakers’ large investments in the US could jeopardise the country’s competitive edge, with its executive director Ahn Ki-hyun telling the FT this month: “We could lose our status as a chipmaking powerhouse if our companies continue to build plants abroad.”

But Ahn, the trade minister, said extra capacity outside South Korea was required to meet booming future demand for artificial intelligence-related hardware.

“The one major difference of Korean industry from China, the US or Japan is that we have a small population and a small territory,” he said. “So we cannot produce everything here, and some of our companies need to go [overseas] to major markets. We encourage them to do that.”

The trade minister conceded that Seoul would need to offer better incentives for chipmakers to continue building more capacity in South Korea, as other countries — including the US — pursue “nationalistic industrial policies”. South Korea’s conservative president, Yoon Suk Yeol, declared last year that the country was engaged in an “all-out”, global “semiconductor war.”

But minister Ahn added that the reorientation of supply chains amid intensifying US-China tensions would benefit South Korea’s traditional strength of trade diversification, as other countries seek to reduce their dependence on China and Taiwan.

“When they try to ‘de-risk’ from any particular country, they are going to need new partners,” said Ahn. “We are a perfect partner for countries that are trying to build their own fortress — that is our survival strategy.”