Japan's finance minister warns China on currency moves
TOKYO
(AP) — Japanese Finance Minister Taro Aso said Friday that recent moves
by China to allow its currency to depreciate are a concern and could
pose problems for Tokyo.
Associated Press
Fri, Aug 21, 2015, 7:33pm EDT - US Markets are closed
Japan's finance minister warns China on currency moves
By ELAINE KURTENBACH
13 hours ago
A woman using a smartphone
walks by an electronic stock board of a securities firm in Tokyo,
Friday, Aug. 21, 2015. Tokyo’s Nikkei 225 plunged 2 percent in the
morning session as Asian stocks fell further Friday after a survey
showed Chinese manufacturing weakened this month. (AP Photo/Koji
Sasahara)
"Chinese factors are a big part of this, without a doubt," Aso said at a regular news briefing.
A
further devaluation of the Chinese yuan could put Japan in a "tough
spot," the Nikkei newspaper and other local media quoted Aso as saying.
It
was unclear what sorts of choices Aso was implying Japan might face,
but the Japanese currency, the yen, has fallen by over 60 percent
against the U.S. dollar since hitting a peak of 75.35 yen to the dollar
in October 2011. It was trading near 123 yen per dollar on Friday.
The
yen's decline has been hastened by massive monetary easing since 2013
by the Bank of Japan, which is buying trillions of yen in assets each
month, seeking to spur growth.
China's
decision to widen the trading band for the yuan, partly to make it more
responsive to market forces, has raised fears that other countries will
also allow their currencies to fall.
While
most economists say such concerns are exaggerated, a few countries have
followed China's lead. Kazakhstan's currency plunged by over 20 percent
against the dollar on Thursday after its government decided to move to a
free float to cope with big swings in global currencies and commodity
prices. Vietnam also allowed its currency, the dong, to weaken slightly.
The
injection of massive amounts of cash into the Japanese economy drove
the yen lower, while in turn boosting profits of major corporations that
earn a large share of their revenue overseas — and pushing share prices
higher.
The strategy is the
backbone of Prime Minister Shinzo Abe's effort to staunch deflation, or
falling prices due to weak demand, and spur growth by persuading
consumers and companies to spend more.
The
yuan's decline against the U.S. dollar has had a limited direct impact
on the value of the yen. But uncertainty over future policy and over the
impact of China's economic slowdown is reverberating across global
markets.
"It's not just China. It's the emerging markets in general," said Masamichi Adachi of JPMorgan in Tokyo.
"At
the end of the day, it's all coming from China. Brazil, South Africa,
many countries are commodity exporters and the final destination is all
going to China."
___
Follow Elaine Kurtenbach on Twitter at : twitter.com/ekurtenba
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