Japan won’t weaken the yen to become more competitive with other countries in trade and any currency intervention would be aimed at restraining excessive moves, Vice Finance Minister Fumihiko Igarashi said.
“It’s not our intention to engage in a currency-devaluation race for the sake of the national interest,” Igarashi said in an interview in Tokyo today. “We could conduct smoothing operations when movements are extremely volatile, that would be permissible.”
Igarashi spoke after Japan’s currency reached its highest against the dollar since 1995, surpassing the level at which the nation’s authorities last month intervened for the first time since 2004. Finance chiefs from the Group of Seven major industrialized nations are poised to discuss exchange rates at a meeting in Washington tomorrow.
Currency wars between major countries could derail the global economy’s recovery, Olivier Blanchard, the International Monetary Fund’s chief economist, told Bloomberg Television in an interview today.
Japan’s currency, which has risen 12 percent this year, traded at 82.92 per dollar at 1:12 p.m. in Tokyo after touching 82.77 yesterday. Japan sold more than 2 trillion yen ($24 billion) in its intervention on Sept. 15.
Noda to Explain
Finance Minister Yoshihiko Noda said he will explain last month’s action to his counterparts at the gathering of G-7 finance ministers and central bankers after the sales were criticized by European officials and U.S. lawmakers. Noda declined to comment on the currency’s advance in Tokyo today.
Japan’s sales came after countries from China to Brazil and South Korea pursued steps to limit gains in their currencies. Canadian Finance Minister Jim Flaherty said yesterday that “there are concerns about interventions in currency markets” and that he’s “sure” the issue will be discussed in Washington.
U.S. Treasury Secretary Timothy F. Geithner said yesterday Japan didn’t fuel international tensions when it intervened. The Treasury chief said there’s a “damaging dynamic” at work in currency markets as countries race to limit appreciation. When asked whether he thought Japan had “set the fire” for this dynamic, Geithner responded, “I don’t, no” in remarks at the Brookings Institution in Washington.
Igarashi said he thinks Geithner and Noda “understand each other” on issues including currencies.
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