Japan denies Trump’s currency manipulation charge

PUBLISHED : Wednesday, 01 February, 2017, 1:58pm
UPDATED : Wednesday, 01 February, 2017, 10:33pm

Japan denied on Wednesday US President Donald Trump’s accusation that Tokyo has been seeking to devalue the yen, saying that it is not manipulating the foreign exchange market.

Foreign exchange rates are led by the markets. We are not manipulating them
Masatsugu Asakawa, vice finance minister for international affairs

Trump’s remarks left Japanese authorities on guard against speculative yen-buying, prompting them to stress that the Bank of Japan’s monetary policy is not aimed at devaluing the yen but rather pulling the economy out of chronic deflation.

“It’s not true at all,” Chief Cabinet Secretary Yoshihide Suga said of the new president’s criticism. “Stability in currencies is important and we will continue to monitor carefully developments in the currency market.”

Tokyo will communicate with Washington over currency and other economic and trade issues, the top government spokesman said.

Trump on Tuesday told a meeting of pharmaceutical executives in Washington that Japan and China are playing “the money market, they play the devaluation market and we sit there like a bunch of dummies”.

Japanese officials quickly defended Tokyo’s position. “Foreign exchange rates are led by the markets. We are not manipulating them,” Masatsugu Asakawa, vice finance minister for international affairs, told reporters on Wednesday.

“I don’t quite understand what [Trump] actually meant,” Asakawa said, noting that it has been a long time since Japan last intervened in currency markets.

Trump’s election in November has boosted hopes for US economic growth and lifted the dollar against the yen, seen as a boon to Japanese exporters. Trump, who has taken a protectionist stance on trade, has said the dollar is too strong.

The dollar slumped to a two-month low of 112.08 yen at one point in New York on Tuesday following Trump’s remarks. The dollar traded around the 113 yen line in Tokyo.

Dollar logs worst January in 30 years after Trump slams China, Japan over currencies

Since taking office in 2012, Prime Minister Shinzo Abe has been seeking to revitalise the deflation-mired Japanese economy. His “Abenomics” policy mix includes bold monetary easing that has helped weaken the yen and lift Japanese share prices.

After years of efforts to attain its 2 per cent inflation target, the BOJ is aiming to keep the yield on the 10-year government bond target at around zero per cent, helping curb rises in Japan’s long-term interest rates. “The comments are only part of what he said at the pharmaceutical industry’s meeting and we should not worry about it. We will explain [Japan’s stance] through various channels,” a Japanese diplomatic source said.