Japan and the United States expressed concern Monday over the recent depreciation of the yen, with Tokyo saying it was prepared to take action against excessive movements to stabilize foreign exchange markets.
The concerns were mentioned in two statements issued after U.S. Deputy Treasury Secretary Lawrence Summers met Finance Minister Hiroshi Mitsuzuka here in the morning. Summers came to Tokyo while en route to Manila for a meeting of the deputy finance ministers of 12 Asia-Pacific economies for talks on creating a new Asian monetary fund.
Mitsuzuka said Japan was "concerned" over the recent depreciation of the yen, noting that excessive devaluation is undesirable. Summers said the U.S. shares his concern.
The U.S. also called on Japan to take steps to boost domestic demand and reduce its current account surplus, and implied that fiscal stimulus measures should also be considered in an effort to achieve economic growth, according to Finance Ministry officials.
Summers was quoted as saying that Japan needs to secure domestic-demand led growth, and that while Japan's efforts toward fiscal consolidation were important, "economic circumstances need to be kept in mind." Ministry officials said they interpreted Summers' comments as an indication that Washington wants to see fiscal pump-priming steps to prop up the flailing domestic economy.
In response, Mitsuzuka reiterated the government's commitment toward achieving domestic-demand led growth, and said economic fundamentals in Japan "were not bad," officials said. He added that the government's stimulus package due out today would address structural problems in the economy, and hopefully sweep away concerns over its health.
Summers welcomed the move and later told a news conference that decisive actions "which are likely to require public money" were needed to restore the health of Japan's financial system.