Japan opposed to linking currency to trade despite American fears over unfair devaluation
- Economy Minister Toshimitsu Motegi and Finance Minister Taro Aso met with US trade representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin
- US Treasury has placed Japan, China, Korea, India, Germany, and Switzerland on its monitoring list due to potentially questionable foreign exchange policies
Japan has strongly opposed linking monetary policy to trade issues, countering a demand by the United States to include a provision to prevent currency devaluation of its trading partners.
Economy Minister Toshimitsu Motegi met with US trade representative Robert Lighthizer for a second round of trade talks in Washington on Thursday, while Finance Minister Taro Aso had a separate discussion with US Treasury Secretary Steven Mnuchin, with the topic of currencies on both agendas.
The US administration is looking to close the trade deficit with Japan, much of it owing to car exports, and Mnuchin has also said in the past that in future trade deals, including ones with Japan, Washington would like to include a provision to deter currency manipulation.
“I told him that Japan cannot agree to any debate linking trade policy with monetary policy,” Aso said after a meeting with Mnuchin. “Japan won’t discuss exchange rate matters in the context of trade talks.”
I told him that Japan cannot agree to any debate linking trade policy with monetary policy. Japan won’t discuss exchange rate matters in the context of trade talks
The US is concerned that some of its trading partners have unfairly devaluated their currencies through market interventions to help their exporters gain a competitive advantage, which would in turn exacerbate trade and current account imbalances.