Japan’s top currency official said his nation isn’t engaged in “competitive” devaluation, after the yen broke 120 per euro and a U.S. Federal Reserve official expressed concern at the nation’s foreign-exchange policy.
Prime Minister Shinzo Abe “and the new cabinet don’t have any intention of competitive devaluation,” Vice Finance Minister Takehiko Nakao said at a forum in Hong Kong today. “The yen’s depreciation is a correction, or an adjustment from previous excessive appreciation.”
Abe’s campaign to spur growth and aid exporters by driving down the yen is triggering concern that other nations may match him with moves to weaken their currencies. In the U.S., Federal Reserve Bank of St. Louis President James Bullard said Jan. 10 that he’s “a little disturbed” by Japan’s stance and the risk of “beggar-thy-neighbor” policies.
The yen traded as weak as 120.13 per euro today, going beyond 120 for the first time since May 2011. The currency was at 119.93 as of 1:19 p.m. in Tokyo and at 89.58 per dollar.
Abe’s “very strong remarks” about his commitment to exiting deflation are “not the only reason” for the yen’s slide, Nakao said. Stability in Europe, some signs of recovery in the U.S. and a temporary agreement in the U.S. on delaying spending cuts and tax increases are also factors.