U.S. Spars With Japan Over Yen at G-7; No Sign of Currency War

  • Aso: Can’t clearly say yen moves have been ‘orderly’
  • Lew: ‘It’s a pretty high bar to have disorderly conditions’

While it was off the official agenda, friction over the yen was never far away as Group of Seven finance chiefs met in Japan for two days of talks that ended Saturday.

Japanese officials repeatedly voiced their concern about disorderly trading in the currency in the days and weeks leading up to the gathering, stating that the government could intervene in the market if needed. The U.S. Treasury countered that recent moves had been orderly, giving no reason to intervene to weaken the yen.

Below is a chart of trading in the yen in recent years, followed by key comments from Japanese Finance Minister Taro Aso and U.S. Treasury Secretary Jack Lew at the G-7 event in Sendai, northern Japan. While the U.S. and Japan were not alone in commenting on currency issues, French Finance Minster Michel Sapin was clear in stating that currency war wouldn’t break out among G-7 members.

Japan’s Aso:

  • "I can understand if the currency moves up or down over time, but if you look at it over the last few weeks, you’ve got moves of 5 yen in a few days, or 8 or 9 yen. You can’t clearly say that that’s orderly."
  • From the U.S. standpoint, the yen had weakened from around 70 against the dollar to around 120, so “it’s natural” for them to say that the current moves are orderly.
  • "They have an election and we have an election and we both have TPP talks. There are various things on our plates and we of course have to say various things as that’s our jobs. I think we always have to be careful to communicate so that emotion doesn’t get in the way of our talks."

U.S.’s Lew:

  • "I have been clear on our analysis of current exchange-rate movements -- it’s a pretty high bar to have disorderly conditions."
  • "It’s important that the G-7 again reiterated the positions that we’ve taken in the past, which are very important, which is a commitment to refrain from exchange-rate targeting. And I think it’s important that at the G-20 we had an agreement to refrain not only from competitive devaluation but to communicate so that we do not surprise each other."
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