Japan rejects Trump accusation of devaluing yen in currency war
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Version 0 of 1. Japan has rejected Donald Trump’s claims that Tokyo was deliberately weakening the yen to gain an unfair trade advantage over the US. Trump told a meeting of pharmaceutical companies on Tuesday that Japan, along with China and Germany, were guilty of “global freeloading” for using regulation and currency devaluation in their trade dealings with the US. The president’s trade adviser, Peter Navarro, also accused Germany of using a “grossly undervalued” euro to gain an unfair advantage over the US and other EU countries. In unusually frank comments, Japan’s chief cabinet secretary, Yoshihide Suga, said Trump’s criticism “completely misses the mark”. Suga added that the Bank of Japan’s pursuit of monetary easing was intended to boost inflation, not weaken the yen against the dollar. Japan’s policy was in line with G7 and G20 agreements, he said, adding that Tokyo would continue to respond to “one-sided” currency moves by other countries. Vowing to end the emasculation of US trade, Trump’s said: “You look at what China’s doing, you look at what Japan has done over the years. ... they play the money market, they play the devaluation market and we sit there like a bunch of dummies.” According to a transcript of Tuesday’s meeting, Trump said other countries “live on devaluation”. Trump’s outburst, which suggests he could backtrack on his wish to see higher US interest rates, came at the end of the worst January for the dollar for three decades. But that follows a huge rise in the dollar on the back of his election win in November when promises of a huge stimulus for the US economy sent the greenback to 14-year highs. The yen was one of many Asian currencies that pushed lower as a result but, falling more than 10% against the dollar since Trump’s election victory. The US currency briefly fell to 112.08 yen in Tokyo on Wednesday, but later recovered to around 113 yen as investors sensed a bargain. Japan’s prime minister, Shinzo Abe, will explain Japan’s monetary easing policy when he meets Trump in Washington on 10 February, according to Suga. Abe, who has declined to join in the widespread condemnation of Trump’s immigration policies, is also expected to emphasise Japanese automakers’ role in the US, where it employs just over 1.5 million people, following the president’s threat to impose a ”big border tax” on Toyota for building a new vehicle plant in Mexico. The Japanese leader will propose a raft of new investments in US infrastructure that would create hundreds of thousands of jobs in sectors such as high-speed rail and shale oil development, Kyodo news reported. Japan’s central bank has been pursuing a super-loose monetary policy since Abe became prime minister four years ago, as it attempts to encourage consumer spending and lift the world’s third biggest economy out of its deflationary spiral – measures that have yet to pay off. The yen has weakened considerably in that time, from about 80 yen to the dollar to a low of about 125 yen in the middle of 2015. The dollar was trading near 100 yen in August but now stands at about 113 yen. The Nikkei share average hovered around the 19,000-point mark on Wednesday, as investors were shaken by the possible impact of Trump’s protectionist stance, days after he horrified Japanese officials by implementing a campaign promise to pull the US out of the Trans-Pacific Partnership free trade agreement. “There are lots of concerns about his policy moves, particularly for Japan whenever he mentions the currency rate,” said Harumi Taguchi, principal economist at IHS Markit in Tokyo. A finance ministry official added to denials that Japan was deliberately seeking a weaker yen, which helps the country’s exporters because it boost repatriated profits on sales made overseas. “Foreign exchange rates are led by the markets. We are not manipulating them,” Masatsugu Asakawa, vice finance minister for international affairs, said, according to Kyodo. “I don’t quite understand what (Trump) actually meant,” Asakawa added, since Japan had not intervened in forex markets for some time. |