New Finance Minister Koriki Jojima said the government must “carefully consider” whether to extend the currency swap agreement with South Korea but refused to be drawn out on whether Tokyo will propose an extension.
“I will not answer a hypothetical question,” Jojima, 65, who was appointed finance minister in Monday’s Cabinet reshuffle, said Wednesday during a joint interview with The Japan Times and other media outlets.
Relations between Tokyo and Seoul have hit the skids since South Korean President Lee Myung Bak paid a visit in August to disputed Takeshima in the Sea of Japan, a couple of rocky outcroppings called Dokdo by South Korea, which administers them. The islets are the focus of a long-standing territorial dispute as Japan claims them as an inherent part of its territory.
In response to Lee’s visit, which was viewed as provocative by some in Japan, certain Diet members have urged the government not to extend a portion of the $70 billion (¥5.5 trillion) currency swap deal.
The agreement, intended to limit exposure to exchange rate fluctuations, expires at the end of this month and Seoul has yet to file a formal request to renew it.
The swap deal “is a theme that needs to be discussed carefully,” including the terms of a possible extension, Jojima said.
His appointment as finance minister was met with surprise by some observers, since it is Jojima’s first Cabinet post and he is virtually unknown overseas.
But with the government desperately striving to pass a bill on the issuance of bonds that would fund the fiscal 2012 budget, Jojima’s experience as Diet policy chief of the ruling Democratic Party of Japan could come in handy.
“I believe I have some connections with opposition parties,” Jojima said during the interview.
“Having previously been in power, (the Liberal Democratic Party and New Komeito) are well aware how important it is for the bond issuance bill to clear the Diet. I am hoping they will collaborate with us.”
Regarding the yen’s continued strength against the dollar and other major currencies, Jojima said he will continue the stance of his predecessor, Jun Azumi, and hinted that intervention in the currency markets remains an option.
The government “will take bold actions” if the yen’s appreciation escalates to even more excessive levels, he said.
On Tokyo’s hosting of the annual meetings of the International Monetary Fund and the World Bank next week, Jojima said he is ready to do “all I can” to enable Japan to contribute to global economic stability.
The government will also take the opportunity to explain the need to curb the soaring yen during Group of Seven meetings scheduled for next Wednesday, he added.
Jojima graduated from the University of Tokyo’s faculty of agriculture in 1970. He worked for food giant Ajinomoto Co. for 25 years, holding key positions in its workers union. He then turned to politics and won his first Diet seat in the 1996 Lower House election.
Finance chiefs to meet
Finance chiefs from the countries involved in the East Asia Summit will meet Oct. 13 in Tokyo to exchange views on the economic situation and financial cooperation amid concerns over a slowdown in Asia and the European sovereign debt crisis.
Japanese officials said Wednesday the finance ministers from the Association of Southeast Asian Nations, Japan, China, South Korea, the United States and Russia, among others, will meet on the sidelines of the annual meetings in Tokyo of the International Monetary Fund and the World Bank.
It will be the second meeting by the finance ministers of the East Asia Summit, following the first conference in May 2010.