U.S., Japan disagreement on yen moves overshadows G7 meeting

Sat May 21, 2016 6:41am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Leika Kihara and Tetsushi Kajimoto

SENDAI, Japan (Reuters) - The United States issued a fresh warning to Japan against intervening in currency markets on Saturday as the two countries' differences over foreign exchange overshadowed a Group of 7 finance leaders' gathering in the Asian nation.

Japan and the United States are at logger-heads over currency policy with Washington saying Tokyo has no justification to intervene in the market to stem yen gains, given the currency's moves remain "orderly".

The rift was on full show at the G7 finance leaders' meeting in Sendai, northeastern Japan, with U.S. Treasury Secretary Jack Lew saying he did not consider current yen moves as "disorderly" after a bilateral meeting with his Japanese counterpart.

"It's important that the G7 has an agreement not only to refrain from competitive devaluations, but to communicate so that we don't surprise each other," Lew told reporters on Saturday. "It's a pretty high bar to have disorderly (currency) conditions.

Japanese Finance Minister Taro Aso said there was no "heated debate" on the yen with Lew, and that it was natural for countries to have differences in how they see exchange-rate moves. But the meeting with Lew did not stop him from issuing verbal warnings to markets against pushing up the yen too much.

"I told (Lew) that recent currency moves were one-sided and speculative," Aso said in a news conference on Saturday, adding that the yen's gains in the past few weeks have been disorderly.

While Aso said his G7 counterparts reaffirmed the importance of exchange-rate stability, Japan received no public endorsements from other G7 members for intervention to contain "one-sided" yen rises.

"There is a consensus that monetary policy is well-adapted and there are no big discrepancies in currencies, so there is no need to intervene," French Finance Minister Michel Sapin told reporters after the two-day G7 gathering concluded on Saturday.   Continued...

 
Participants of the G7 finance ministers and central bankers hold their first session at the G7 finance ministers and central bankers meeting in Sendai, Miyagi prefecture, Japan, in this photo taken by Kyodo May 20, 2016.  Mandatory credit Kyodo/via REUTERS