TOKYO, Feb. 2, Kyodo — Japan does not rule out stepping into the currency market as an emergency step, Prime Minister Shinzo Abe said Thursday, days after U.S. President Donald Trump accused Japan of devaluing the yen.
Speaking at a session of the House of Representatives Budget Committee, Abe said, however, that no intervention in the currency market has been carried out under his administration, which was launched in December 2012.
“We don’t rule it out. It’s possible as an emergency response,” Abe told the committee, referring to the possibility of a currency intervention.
Trump told a meeting of pharmaceutical executives in Washington on Tuesday that Japan and China are playing the money market. “They play the devaluation market and we sit there like a bunch of dummies,” he added.
Japanese officials were quick to deny his accusations, arguing that the Bank of Japan’s monetary policy is intended to pull the Japanese economy out of deflation and not to devalue the yen. They said that currency moves are market-driven and Japan is not manipulating them.
Japan has not intervened in the foreign exchange market since 2011 to stem the yen’s advance. A strong yen erodes the profits of exporters when repatriated and undermines the price competitiveness of Japan-made products overseas.
Abe is scheduled to meet with Trump, who has said the dollar is too strong, in the United States on Feb. 10, raising speculation that currency policy will be one of the agenda items.
“It’s a matter that should be discussed between the finance minister and the U.S. Treasury secretary and I do not believe it is appropriate to discuss it during summit talks,” Abe said.
The BOJ has undertaken bold monetary easing by buying assets such as Japanese government bonds to set the stage for Japan to break with decades of deflation. The easing policy has helped weaken the yen and lifted Japanese stocks.
On the issue of the BOJ’s monetary easing, Abe said, “It’s the (same) kind of policy carried out by the U.S. Federal Reserve and the European Central Bank.”