Currency worries as Japan lets yen fall
The United States has already warned Japan to stick to the rules setting the stage for a stormy Group of Seven meeting of finance ministers in Britain.
US Treasury Secretary Jack Lew said Japan had “growth issues” that needed to be dealt with but that it needed to stay within the bounds of international agreements amid fears of currency wars spreading across the world’s financial markets.
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Hide AdThe yen broke through resistance to fall as low as 101.43 per dollar, down nearly three percent from Thursday’s high of around 98.65, and the weakest level in over four-and-a-half years.
The yen has declined more than 20 per cent against the dollar in just six months as the first of the Asian Tiger economies attempts to roar again with aggressive monetary easing and fiscal expansion.
The move has started to pay off for Japan as its trade gap narrows and exporters’ overseas income is boosted when transferred into yen.
It has put a spotlight on Japan’s policies and whether it was deliberately devaluing its currency to give exporters an edge despite economy minister Akira Amari yesterday insisting Tokyo had no intention to manipulate currency levels.
But having urged Tokyo for years to do something to revive its economy, other world powers are not in a strong position to complain now that it is taking such aggresive steps.