The yen’s 55% surge over the five years through 2011 hammered Japan’s exporters, and helped spur the Liberal Democratic Party to adopt monetary stimulus as a campaign issue during the election that ushered it back to office in December.
Finance Minister Taro Aso on Dec. 31 rejected trading partners’ right to criticize Japan’s currency policies. He said that the U.S. should have a stronger dollar and questioned whether major G-20 nations had stuck to pledges from 2009 to avoid competitive devaluations. During his election campaign, Abe said foreign-bond purchases were a possible monetary tool.
G-20 nations will press Japan to clarify its policy toward exchange-rate movements, said the Russian finance minister.
“We have to get to the bottom of this of course, listen to our Japanese colleagues and how they explain this and what decisions they will take and what exchange-rate policy they will follow,” Siluanov said.
Major G-20 economies have reached a consensus that market- determined exchange rates are an “important element of firm, stable and long-term growth” and that’s it’s not worth interfering with market forces, Ulyukayev told Bloomberg News today.
Still, the confusion surrounding the G-7 stance on the yen’s decline makes it unlikely the larger G-20 group can agree on effective action, according to Daragh Maher, a currency strategist at HSBC Holdings Plc in London.
“The G-7 ended with three different interpretations of a communique,” Maher said in a radio interview today on “Bloomberg the First Word” with Michael McKee. “What’s the likelihood we can get agreement from 20 people around a table?”
If Japan wants to see the yen sold against other G-7 currencies, “it will very likely happen,” Steven Englander, head of Group of 10 currency strategy at Citigroup Inc., said in an e-mailed research note yesterday.