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DPJ AT THE HELM / Fujii: Japan won't meddle with yen value
Masataka Morita / Yomiuri Shimbun Staff Writer
PITTSBURGH--Finance Minister Hirohisa Fujii told U.S. Treasury Secretary Timothy Geithner that Tokyo had no intention of intervening in the foreign exchange market to make the yen fall in value.
At a meeting with Geithner held Thursday, prior to the opening of the Group of 20 summit meeting to discuss measures to tackle the global financial crisis, Fujii told Geithner that Japan would not sell yen or buy the dollar arbitrarily.
After the talks, Fujii said to reporters, "I told [Geithner] that Japan is against policies that some countries are taking of letting currencies fall in value, and we'll deal with the yen according to that policy."
It is unusual for a finance minister to express at an official meeting his or her will to not intervene in the foreign exchange market. Some observers expressed concern that Fujii's remarks could influence the foreign exchange and stock markets.
Fujii pointed out a recent trend in which some countries are adopting policies to make their currencies fall--somehing condemned by participants at the G-20 summit meeting held in London in April--but that Japan has no intention of doing this.
"Mr. Geithner showed quite a favorable response to our policy [expressed at the meeting]," Fujii said.
However, Fujii also expressed his understanding of the U.S. government's stance in favoring a strong dollar. "Mr. Geithner has been saying that the dollar has to be strong in principle. I understand this," Fujii said.
Meanwhile, Fujii said he told Geithner that the new government will shift Japan's economic policy to pursue economic growth led by domestic demand, a pledge that the Democratic Party of Japan stipulated in its manifesto for last month's House of Representatives election.
The U.S. government has been pointing out the problem of global current account imbalances. To diminish its trade deficit, Washington has been urging countries including China and Japan to expand domestic demand to fix the imbalances. Fujii said Geithner was supportive of Japan's policy of putting emphasis on domestic demand.
A reporter pointed out that if the government refrains from intervening in the foreign exchange market to make the yen fall, the yen's value could rise, making the price of imported products cheaper, a trend that could stimulate domestic demand.
However, Fujii said: "I don't want to adopt an exchange rate policy that has such intentions. Foreign exchange markets are the bastion of a free economy. I don't think it is proper for the government to intervene in the markets arbitrarily."
Regarding the tightening of capital adequacy requirements on banks, which is expected to be one of the key items on the summit's agenda, Fujii said: "I approve of putting [capital adequacy ratios] on a healthy footing. However, I convinced [Mr. Geithner] that considering the current situation, a credit crunch would occur in Japan if we do it hastily."
(Sep. 26, 2009)
Masataka Morita / Yomiuri Shimbun Staff Writer
PITTSBURGH--Finance Minister Hirohisa Fujii told U.S. Treasury Secretary Timothy Geithner that Tokyo had no intention of intervening in the foreign exchange market to make the yen fall in value.
At a meeting with Geithner held Thursday, prior to the opening of the Group of 20 summit meeting to discuss measures to tackle the global financial crisis, Fujii told Geithner that Japan would not sell yen or buy the dollar arbitrarily.
After the talks, Fujii said to reporters, "I told [Geithner] that Japan is against policies that some countries are taking of letting currencies fall in value, and we'll deal with the yen according to that policy."
It is unusual for a finance minister to express at an official meeting his or her will to not intervene in the foreign exchange market. Some observers expressed concern that Fujii's remarks could influence the foreign exchange and stock markets.
Fujii pointed out a recent trend in which some countries are adopting policies to make their currencies fall--somehing condemned by participants at the G-20 summit meeting held in London in April--but that Japan has no intention of doing this.
"Mr. Geithner showed quite a favorable response to our policy [expressed at the meeting]," Fujii said.
However, Fujii also expressed his understanding of the U.S. government's stance in favoring a strong dollar. "Mr. Geithner has been saying that the dollar has to be strong in principle. I understand this," Fujii said.
Meanwhile, Fujii said he told Geithner that the new government will shift Japan's economic policy to pursue economic growth led by domestic demand, a pledge that the Democratic Party of Japan stipulated in its manifesto for last month's House of Representatives election.
The U.S. government has been pointing out the problem of global current account imbalances. To diminish its trade deficit, Washington has been urging countries including China and Japan to expand domestic demand to fix the imbalances. Fujii said Geithner was supportive of Japan's policy of putting emphasis on domestic demand.
A reporter pointed out that if the government refrains from intervening in the foreign exchange market to make the yen fall, the yen's value could rise, making the price of imported products cheaper, a trend that could stimulate domestic demand.
However, Fujii said: "I don't want to adopt an exchange rate policy that has such intentions. Foreign exchange markets are the bastion of a free economy. I don't think it is proper for the government to intervene in the markets arbitrarily."
Regarding the tightening of capital adequacy requirements on banks, which is expected to be one of the key items on the summit's agenda, Fujii said: "I approve of putting [capital adequacy ratios] on a healthy footing. However, I convinced [Mr. Geithner] that considering the current situation, a credit crunch would occur in Japan if we do it hastily."
(Sep. 26, 2009)
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