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Merkel worried by Tokyo’s actions to lower yen

Kyodo

German Chancellor Angela Merkel has expressed concern over Japan’s exchange-rate policy, joining two key financial officials in Berlin in slamming the Bank of Japan’s move to ease monetary policy and weaken the yen amid intense pressure from the new government.

“Let me say, I am not completely without worries on this,” Merkel said Thursday at the World Economic Forum in Davos, Switzerland, when asked about the impact of the yen’s exchange rate on global competitiveness. “I must admit that I look with a certain degree of concern at Japan right now.”

In a speech Monday, Bundesbank President Jens Weidmann also pointed to the Liberal Democratic Party-led administration as an example of governmental meddling in the business of monetary authorities, or central banks. German Finance Minister Wolfgang Schaeuble last week voiced concern about Prime Minister Shinzo Abe strong-arming the BOJ into further monetary easing, saying it could potentially create excess liquidity in the global financial markets.

Merkel apparently contrasted Japan’s monetary easing against China’s recent currency reform, crediting Beijing for its action vis-a-vis the yuan. “I think through the discussion in the G-20, there’s more awareness of political influences or manipulations of the exchange rate. . . . The Chinese government actually reacted quite favorably and also responded to our demand . . .with a certain change in their policies,” Merkel said, referencing the Group of 20 major economies.