US warns Japan over alleged meddling in currency values
Print Edition
THE United States on Saturday issued a fresh warning to Japan against intervening in currency markets as the two countries’ differences over foreign exchange overshadowed a Group of 7 finance leaders’ gathering in the Asian nation.
Japan and the US are at loggerheads over currency policy, with Washington saying Tokyo has no justification to intervene in the market to stem yen gains, given the currency’s moves remain “orderly.”
The rift was on full show at the meeting in Sendai, northeast Japan, with US Treasury Secretary Jack Lew saying he did not consider current yen moves as “disorderly” after a bilateral meeting with his Japanese counterpart.
“It’s important that the G7 has an agreement not only to refrain from competitive devaluations, but to communicate so that we don’t surprise each other,” Lew told reporters.
“It’s a pretty high bar to have disorderly conditions.”
Japanese Finance Minister Taro Aso said there was no “heated debate” on the yen with Lew, and that it was natural for countries to have differences in how they see exchange-rate moves. However, the meeting with Lew did not stop him from issuing verbal warnings to markets against pushing up the yen too much.
“I told (Lew) that recent currency moves were one-sided and speculative,” Aso told a news conference on Saturday, adding that the yen’s gains in recent weeks were disorderly.
While Aso said his G7 counterparts reaffirmed the importance of exchange-rate stability, Japan received no public endorsements from other G7 members for intervention to contain “one-sided” yen rises.
“There is a consensus that monetary policy is well-adapted and there are no big discrepancies in currencies, so there is no need to intervene,” French Finance Minister Michel Sapin told reporters.
As years of aggressive money printing stretch the limits of monetary policy, the G7 response to weak inflation and low growth has become splintered. Leaders called for a mix of policies to boost demand but left it to each country to decide its own priorities — dashing Japan’s calls for more aggressive joint fiscal action.
Germany has shown no signs of responding to calls to boost fiscal spending.
“The most important are structural reforms ... there are more and more (in the G7) recognizing that structural reforms are crucial,” German Finance Minister Wolfgang Schaeuble said in Sendai.
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