BLBG:Yen at 100 Per Dollar Endorsed by Japan Government’s Nishimura
Japan’s deputy economy minister said that a yen at 100 to the dollar wouldn’t be a problem, suggesting global criticism may fail to convince Prime Minister Shinzo Abe to temper his campaign to weaken the currency.
“The current level around 90 can be said to be a correction of the strong yen, but it isn’t over yet,” Yasutoshi Nishimura said in an interview today in Tokyo. He said a level of 110 to 120 would raise import costs, echoing the view of Abe’s adviser Koichi Hamada and suggesting that the government won’t back a currency free-fall.
Nishimura joins Japanese officials in pushing back at international complaints as the yen’s 8 percent decline in two months causes friction ahead of next month’s Group of 20 meeting. He said the Bank of Japan (8301) will need to take “bolder monetary easing” to achieve its new 2 percent inflation target, speaking after data showed a seventh monthly fall in exports and a record annual trade deficit.
The yen resumed its fall today after three days of gains, and was 0.4 percent weaker at 89.10 as of 2:06 p.m. in Tokyo. The currency climbed this week after the central bank set the inflation target with no deadline and delayed additional easing until 2014.
“Europe is in no position to criticize Japan,” Nishimura, 50, said. “Europe has brought about a prolonged weakness of the euro as a result of their own policies, while Japan has supported Europe through purchases of bonds.”
Nishimura also rejected criticism from South Korea that its exporters are “at risk” from Japanese policies, saying that exchange rates should be decided by the market.
Won Intervention
“While the yen is traded completely openly, there may be intervention on the won and the country has fixed regulations on foreign investments,” he said. “It’s appropriate to have a certain level of intervention if fluctuations go too far, but fundamentally currencies should be traded openly.”
The U.S. criticized Japan for undertaking unilateral sales of the yen in 2011, after Group of Seven economies jointly intervened to weaken the currency in the aftermath of the record earthquake and tsunami that year.
Some of Nishimura’s comments echo those of Vice Finance Minister Takehiko Nakao, Japan’s top currency official, who said in an interview yesterday that the Bank of Japan isn’t engaged in a competitive devaluation of the yen.
The central bank’s actions are “aimed at ending persistent deflation, so criticism that it’s a form of competitive devaluation is misplaced,” Nakao said.
The BOJ said this week that it will shift to Federal Reserve-style open-ended asset purchases from January 2014 and targeted the achievement of 2 percent inflation “at the earliest possible time.”
“If we don’t have it make an effort to conduct bolder monetary easing than it is now, it’ll be pretty difficult to achieve 2 percent inflation,” Nishimura said.
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To contact the reporters on this story: Andy Sharp in Tokyo at asharp5@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net
To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net
