Aso to ‘explain’ BOJ’s monetary easing to G-20

Kyodo, Bloomberg

Finance Minister Taro Aso, who also serves as deputy prime minister, is arranging to meet with U.S. Vice President Joe Biden when he goes to Washington this week for a gathering of Group of 20 financial chiefs, government sources said Tuesday.

Aso and Biden are expected to discuss economic policies and developments regarding North Korea, the sources said.

Aso said he will explain to his G-20 counterparts that the purpose of the Bank of Japan’s monetary easing is to overcome the country’s prolonged deflation, not to lower the yen.

The goal of the administration’s economic and monetary policies is “to pull the economy out of a deflationary recession” and any fallout from such actions “not our main objective,” Aso told reporters, emphasizing Japan is not trying to manipulate its currency by forcing the BOJ to take drastic monetary easing steps.

His remarks came after the U.S. Treasury Department’s semiannual report on currency practices prompted a reversal in the yen’s recent depreciation against the dollar by noting the United States will “closely monitor Japan’s policies” and continue to press Japan to “refrain from competitive devaluation.”

While making no direct comment on the report, Aso said he will brief his G-20 counterparts on “Abenomics,” which centers on aggressive monetary easing, massive fiscal spending and growth strategies.

The BOJ earlier this month embarked on new policy measures to pursue stronger monetary easing to achieve its 2 percent inflation target within two years, which briefly pushed up the dollar to nearly ¥100 last week.

In Amsterdam on Monday, European Central Bank President Mario Draghi said Japanese authorities haven’t started a currency war that artificially depresses the yen.

“There is no currency war, not at all,” Draghi said. Measures taken by the BOJ “are determined by domestic policy considerations.”

Draghi referred to a statement the G-20 issued after a February meeting of finance chiefs in Moscow, in which the biggest developed and emerging economies pledged not to target exchange rates for competitive purposes.

The statement “rules out competitive devaluations as such” and is seen “as a common-interest issue,” Draghi said.

For the ECB, the exchange rate “is not a policy target, but it is very important for stability and growth,” he said.