In a report on exchange rates, the U.S. Treasury Department has stopped short of accusing Japan of manipulating the Yen and has said that it will press Japan to refrain from competitive devaluation.
In its semi-annual currency report to Congress, released on Saturday, the Treasury has declared that it will pressure Japan to adhere to international commitments "to remain oriented towards meeting respective domestic objectives using domestic instruments and to refrain from competitive devaluation and targeting its exchange rate for competitive purposes."
The report went further by saying that Japan needs to "take fundamental and thoroughgoing steps to increase the dynamism of the domestic economy, by easing regulations that unduly deter competition in its domestic economy."
It appears that the Treasury's statements concerning the Yen are an attempt to achieve some balance between Japan and China. It is seeking to avoid China otherwise interpreting any lack of action concerning Japan by the U.S. as a green light for China to also pursue exchange-rate devaluation.
The Fed considers the Chinese Yuan to still be significantly undervalued.
The U.S. prefers that the Yen did not weaken significantly further and will be intent on checking that the focus of Japan's policies are on stimulating the domestic Japanese economy and away from its external influences.
It appears that the Treasury's statements concerning the Yen are an attempt to achieve some balance between Japan and China. It is seeking to avoid China otherwise interpreting any lack of action concerning Japan by the U.S. as a green light for China to also pursue exchange-rate devaluation.
The Fed considers the Chinese Yuan to still be significantly undervalued.
The U.S. prefers that the Yen did not weaken significantly further and will be intent on checking that the focus of Japan's policies are on stimulating the domestic Japanese economy and away from its external influences.
On April 4th, the Bank of Japan (BoJ) had surprised markets when it doubled monthly bond purchases to nearly match the Fed's monetary easing. The BoJ also set a two-year target to achieve its goal of 2% inflation and BOJ Governor Haruhiko Kuroda announced on Saturday, that there is "no time limit to the stimulus."
Since April 4th, the Yen has declined against all 16 of its most-traded counterparts. The Yen has since then declined by 2.2% to Dollar, by 3.5% to the Euro and by 2.8% to the Australian Dollar.
Earlier today the Yen was slightly higher by 0.5% to 97.88 per Dollar on weak China data and had gained 0.8% to 127.93 per Euro. The Euro dropped by 0.3% to $1.3077.
G-20 finance ministers are due to meet in Moscow on April 18th and April 19th, ahead of weekend talks of the IMF and World Bank. In February the G-20 had said that Japan could stimulate its economy, with the proviso that, Japanese policy makers would not publicly advocate a weaker Yen.
Since April 4th, the Yen has declined against all 16 of its most-traded counterparts. The Yen has since then declined by 2.2% to Dollar, by 3.5% to the Euro and by 2.8% to the Australian Dollar.
Earlier today the Yen was slightly higher by 0.5% to 97.88 per Dollar on weak China data and had gained 0.8% to 127.93 per Euro. The Euro dropped by 0.3% to $1.3077.
G-20 finance ministers are due to meet in Moscow on April 18th and April 19th, ahead of weekend talks of the IMF and World Bank. In February the G-20 had said that Japan could stimulate its economy, with the proviso that, Japanese policy makers would not publicly advocate a weaker Yen.
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