WASHINGTON – Treasury Secretary Jack Lew indicated Wednesday that the United States is closely watching Japan’s monetary easing experiment to ensure it is not aimed at weakening the yen, and that Washington is likewise “vigilant” toward all Group of Seven industrial economies regarding exchange rates.
“It is imperative that all Group of 20 countries follow through on their recent commitment not to target exchange rates for competitive purposes,” Lew said in a speech in Washington.
“We will also remain vigilant that all G-7 members adhere to their commitment in word as well as action to avoid targeting exchange rates, to orient monetary and fiscal policy toward meeting domestic objectives, using only domestic instruments,” he said.
The wording is stronger than that in a semiannual report on exchange rates released by the Treasury Department last week that says the United States will closely monitor Japan’s policies.
His remarks came ahead of a two-day meeting of G-20 finance ministers and central bank governors from Thursday in Washington.
At the same time, Lew said Japan’s monetary policy is “very much consistent” with the February commitment by the G-20 to avoid targeting the exchange rates, as long as it seeks to encourage domestic demand with domestic tools.