Furusawa Says Japan Will Win Over G-20 Currency Skeptics
Japan’s new top currency official said the nation will be able to convince trading partners that the central bank’s unleashing of unprecedented monetary stimulus last week is not intended to weaken the yen.
“The monetary policy being carried out by the Bank of Japan (8301) is clearly aimed at getting Japan out of deflation,” Mitsuhiro Furusawa, the vice-finance minister for international affairs, said in an interview today in Tokyo. He said Japan will “properly explain” its position at a meeting of Group of 20 nations in Washington next week.
The yen has weakened about 14 percent against the dollar since Prime Minister Shinzo Abe took office in December pledging to pull Japan out of deflation through bold monetary easing. At the G-20 meeting, Furusawa will be tasked with calming concerns of countries including South Korea that the yen’s fall is hurting their trade competitiveness.
“Exchange rates are clearly decided by markets,” Furusawa, 57, said. “We are not causing the market to move. Market participants are moving markets based on various expectations.”
Global finance chiefs pledged not “to target our exchange rates for competitive purposes” in a joint statement at the G-20 meeting in Moscow in February. Japan wasn’t singled out for allowing the yen to drop.
The yen is nearing 100 yen against the dollar, falling this week to its lowest level since April 2009 after BOJ Governor Haruhiko Kuroda pledged last week to double the monetary base to end more than a decade of deflation. The Japanese currency was trading at 99.21 at 7:48p.m. in Tokyo today, down about 6 percent from before the central bank’s policy meeting on April 4.
Furusawa declined to comment on the level of the yen or whether its movements have been volatile. Japan’s monetary authorities will keep monitoring the currency market carefully, he added.
Finance Minister Taro Aso said this week that the excessive gains of the yen -- which rose to 75.35 in October 2011 -- are in the process of correction, repeating that the BOJ’s easing is aimed at shaking off deflation and not intended to artificially depreciate the currency.
While a weaker currency helps exporters and boosts repatriated earnings, the government may be on guard against excessive declines swelling import costs and fueling trade tensions.
South Korea’s Finance Minister Hyun Oh Seok last month urged the G-20 to revisit the issue after the group refrained from criticizing Japanese policies in February. In contrast, International Monetary Fund Managing Director Christine Lagarde this week welcomed the BOJ’s record easing.
Furusawa took his new position last month, replacing Takehiko Nakao, the incoming president of the Asian Development Bank. Furusawa previously headed the ministry’s financial bureau, which manages bond issuance.
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