Japan Defends Itself Against Trump Devaluation Claims

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Japan Defends Itself Against Trump Devaluation Claims

A few days ago, Trump had accused Japan of devaluing the yen in what many financial analysts term as an impending looming currency war between the two countries. Meanwhile, Japanese policymakers hit back at the U.S. President’s accusation of currency devaluation, emphasizing that Japan still abides by G-20 agreement to stop competitive currency manipulation.

Trump on Tuesday harshly criticized China and Japan accusing them of devaluing their currencies.

"You look at what Japan’s doing; you look at what China has done for several years. They play the devaluation market, they play the money market and they expect has to keep quest a bunch of dummies," Trump said this when he met with pharmaceutical chiefs in Washington.

Shinzō Abe the Prime Minister of Japan has defended the country’s massive stimulus program initiated by the Bank of Japan saying that the program was meant to reflate the country’s economy but not to manipulate the yen.

"Bold monetary easing is an important policy we put in place to boost our economic growth and we are not the only one doing this. Even the U.S. is doing the same thing," he told Japanese policy lawmakers on Wednesday.

"If our economy improves, I don’t think it will be a bad thing for the U.S. I will explain this point when I will meet him next week," he added.

There was panic due to the problem a rise in the Japanese yen could inflict on the export-reliant economy. This made the senior finance officials in Japan to move with speed to contain the damage as the US dollar hit a 2-month low of 112.08 Japanese yen following Trump's remarks.

The top government spokesman told reporters drawn from various local and international news outlets that Japan did and does not intend to devalue the yen to gain an unfair trade advantage.

Chief Cabinet Secretary Yoshihide Suga, one of the Prime Minister’s closest ally and the point-person on economic policy said, "Japan is formulating policies line with agreements made by the G20 and G7 countries. We don’t intend to change that."

Several diplomats have also defended Japan against the Trump’s accusation. For instance, Japan's top currency diplomat, Masatsugu Asakawa, told reporters that the claim does not hold water. He said that the exchange rates in any country are determined by current markets and were not manipulated.

“Kuroda, the Governor of Bank of Japan, has said repeatedly that the aim of the country’s monetary policy is to end deflation. The policy does not aim at manipulating currency rates. If Trump is referring to currency intervention, Japan hasn’t or does not have any plans to do it lately," Asakawa told the reporters.

When Kuroda was called by parliament to clarify the issue, he told the policy lawmakers that the central bank would continue to advocate for powerful monetary easing policies aimed at achieving its 2% inflation target as quickly as possible.

Trump's comments suggest that issues surrounding currency such as policy is causing a devaluation and possible intervention will be among main topics that they will discuss with the Japanese Prime Minister at White House on 10th February.

Japanese media has reported that the two heads of states may hold another meeting in Florida the following day.

Keyword: Japan Defends Itself Against Devaluation Claims.

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