'Yen manipulation claims off the mark'Comment on this story
Tokyo - Japan's Finance Minister on Friday rejected claims Tokyo was orchestrating a slide in the yen, a day after German leader Angela Merkel voiced concern over the new government's exchange rate policy.
“The criticism that (the government) is manipulating the currency rate is completely off the mark,” Taro Aso was quoted as saying in the online edition of the leading Nikkei business daily.
His comments were the latest in a simmering row over Japan's currency, with critics saying Tokyo's pressure on the central bank for aggressive policy action amounted to meddling that could spark a global currency war.
On Tuesday, the Bank of Japan (BoJ) announced an open-ended easing plan and a two-percent inflation target to stoke growth in the deflation-plagued economy. The move was widely seen as the BoJ bowing to political pressure.
“I will admit I am not without some concern about Japan right now,” Merkel told top business and political leaders at the World Economic Forum in Davos on Thursday.
The German leader added that “political influences or manipulations of the exchange rate” have become a hot topic within the Group of 20.
The yen hit record highs against the dollar in late 2011 - sitting around 75 to the greenback - and remained strong through much of last year, hammering Japanese exporters by making their products less competitive overseas.
But it has tumbled in recent months, since opposition leader Shinzo Abe promised before December's election that he would urge the bank to be more aggressive in its battle to save the economy.
Abe swept to power in the poll and has since moved to bring BoJ policies into line with his new government's position, at one point warning he would alter the law guaranteeing the bank's independence it it did not follow suit.
The yen weakened again Friday, with the dollar buying 90.50 yen in Tokyo, against 90.40 yen in New York, while the euro fetched 120.92 yen against 120.91 yen.
Aso's comments Friday came as his economic revitalisation minister Akira Amari, who was to leave for Davos on Friday, was quoted by Dow Jones Newswires as saying he would like to meet with “to explain our position so there won't be any worries at all”.
In an interview published Thursday Takehiko Nakao, vice minister of finance for international affairs, told the Wall Street Journal that “Japan has no intention whatsoever of competitive devaluation of the yen”.
He added: “It shouldn't be criticised even if a monetary policy - which aims at ensuring growth and price stability of any country Ä has a certain impact on exchange rates as a consequence.”
The yen's steep tumble has sparked criticism from the head of the US Federal Reserve Bank of St. Louis, a Russian central banker who warned over a global currency war and Jens Weidmann, the head of Germany's Bundesbank, .
On Monday, Weidmann said the result of government meddling in central bank policies, citing Japan as an example, “could be a much stronger politicising of exchange rates”.
“Up to now the international monetary system has weathered the (financial) crisis and avoided a devaluation race and I hope very much that will remain the case,” he said.
The monetary easing policies undertaken by the central banks of numerous industrialised countries - predominantly the US Federal Reserve - during the crisis, primarily aimed at unfreezing financial markets, have also tended to lower the value of their currencies.
A number of emerging nations such as Brazil were unhappy and spoke of a currency war that would see nations work to bring down the value of their currencies, possibly for trade gains.
China has been a regular target of criticism that it manipulates the value of its yuan currency to prop up the country's export-heavy economy. - Sapa-AFP