WASHINGTON (Kyodo) U.S. Treasury Secretary John Snow on Monday tacitly criticized Japan’s continued massive currency market intervention, following the lead of U.S. Federal Reserve Board Chairman Alan Greenspan.
“No currency can be considered strong if it is propped up on life support with intervention,” Snow said while speaking to the National Association of State Treasurers.
While he reiterated the U.S. position of favoring a strong dollar, Snow said, “The relative value of currencies are best set through open and competitive currency markets.”
Although Snow did not directly mention Japan’s continued yen-selling, dollar-buying intervention to weaken the yen, his remarks echoed the warning issued last week by Greenspan.
In a March 2 speech in New York, Greenspan said Japan’s continued intervention at the present scale will “no longer meet” its monetary policy needs, given the current economic situation.
Greenspan also said that if there had not been massive intervention by Japan and China, the dollar would have fallen more rapidly to help curb the swelling U.S. current account deficit.
The Finance Ministry used a record 20.4 trillion yen in 2003 for currency market intervention, more than five times the 4 trillion yen spent in 2002.
Fearing that a strong yen would hurt the economic recovery by making Japanese exports less competitive, the ministry has been continuing its massive intervention this year.
The latest massive intervention was apparently conducted Friday, only a few days after Greenspan warned against such a move, according to sources close to the action.
The timing of the intervention — to the tune of around 800 billion yen — was apparently in anticipation of a Tuesday flow of funds into current account deposits kept by financial institutions at the Bank of Japan, the sources said.