Japanese Finance Minister Taro Aso said he agreed with his U.S. counterpart Steven Mnuchin on the need to abide by the G7 and G20 agreements on currency policy, including a warning that excess currency volatility is undesirable.
U.S. President Donald Trump has accused Japan of exploiting a weak yen to give exports an unfair trade advantage, leaving Japanese policy-makers worried that Washington may upend a G20 agreement that gives Tokyo room to intervene in the currency market to stem any unwelcome yen spike.
“We agreed that it was important to maintain the G7 and G20 agreements on currency policy,” Aso told reporters after meeting with Mnuchin on Friday on the sidelines of a Group of 20 finance leaders’ weekend gathering.
The G20 economies have long agreed on three points on currency policy — to refrain from competitive devaluations, avoid targeting exchange rates for competitive purposes and that “excess volatility and disorderly movements” in currency rates were undesirable.
In their first face-to-face meeting, Aso said he agreed with Mnuchin on the need to respect all three of that points. They did not discuss recent currency moves or monetary policy, he said.
The U.S. Treasury Department issued a statement after the meeting only to say Aso and Mnuchin discussed “latest developments in the U.S. and Japanese economies”.
The two also re-confirmed that currency issues should be left for respective finance leaders to discuss, instead of at a bilaterial economic dialogue kicking off next month, Aso said.
Japanese premier Shinzo Abe has said he agreed with Trump to allow their finance leaders to debate currency issues, suggesting Washington may soften criticism Japan was manipulating the yen to gain a trade advantage.
Aso said he also told Mnuchin it was important to resist protectionism as free trade has brought enormous economic benefits to many countries.
“I didn’t get any push back (from Mnuchin),” Aso said.
The G20 financial leaders will renounce competitive devaluations and warn against exchange rate volatility, but have not yet found a common stance on trade and protectionism, a draft statement of their meeting showed on Friday.
They may struggle to present a united front on protectionism after Trump’s administration began considering imposing a border tax that would make imports more expensive.
BOJ Governor Haruhiko Kuroda said while there was a shared consensus in the global community of the need to promote free trade, it was uncertain how the G20 debate could unfold.
“The U.S. administration has yet to lay out clear policies on trade, so it’s inappropriate to speak about their approach with any preconception,” Kuroda told reporters upon arrival for the G20 meeting.
Source: Reuters (Reporting By Leika Kihara, editing by Jan Strupczewski/Jeremy Gaunt)