German Finance Minister Wolfgang Schaeuble called on the Group of 20 to denounce the “manipulation” of currency rates, reflecting concerns that Japan is trying to push down the yen to gain a trading advantage.
“Exchange rates shouldn’t be manipulated,” Schaeuble told reporters after a meeting of euro-area finance chiefs in Brussels today. “There aren’t any exchange-rate problems with the euro and in the euro, but there are concerns in connection with other major currencies.”
The euro has outperformed the world’s nine other leading currencies in the past six months, rising 7.8 percent, according to the Bloomberg Correlation-Weighted Currency Indexes. The yen has dropped 20 percent as new Prime Minister Shinzo Abe advocated domestic demand-boosting policies.
Still, divisions within the 17-nation euro region may lessen the impact of any effort to criticize Japan for seeking to depress its currency at the G-20 meeting in Moscow later this week. Jens Weidmann, head of the German central bank, echoed several finance ministers in saying the euro isn’t overvalued.
Finance ministers from the Group of Seven, the core group at the Feb. 15-16 Moscow meeting, will seek to calm concern the world is on the brink of a currency war, two officials from G-7 nations said earlier today on the condition of anonymity.
Shares of companies from Toyota Motor Corp. to Nissan Motor Co. have soared in recent weeks with the yen’s retreat, and economists at banks from Goldman Sachs Group Inc. to Nomura Holdings Inc. have boosted their projections for Japanese growth.
Today’s Brussels debate was ignited by French Finance Minister Pierre Moscovici, who said exchange rates are working against euro-zone exporters, making it harder for the economy to bounce back from the recession it slipped into last year.
Data due on Feb. 14 will probably show a 0.4 percent contraction in the euro-zone economy in the fourth quarter, the biggest decline since the first quarter of 2009, according to the median of 45 estimates gathered by Bloomberg News.
The euro’s rally is “negative for growth,” Moscovici said. “Exchange rates can’t be subject to moods or speculation.” Without naming Japan, he blamed the euro’s acceleration on “more aggressive practices by some of our partners.”
European officials left open how much pressure they will put on Japan, with ministers from Austria, the Netherlands, Finland and Luxembourg seeing no need for for a coordinated international offensive to adjust currency values.
“An artificial weakening would be inappropriate,” Austrian Finance Minister Maria Fekter said. “We’re at a happy medium. The euro has been much stronger and much weaker. From my point of view, the excitement about the exchange rate is unjustified.”
“We’re far from a currency war,” Luxembourg Finance Minister Luc Frieden said. “We’re happy that the euro reflects the fundamentals of the European economy.”