Japan urges caution over Trump’s complaint on strong dollar
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Japan should be careful about recent remarks by US President Donald Trump on currencies and might need to convince Washington its monetary easing is not aimed at weakening the yen but beating deflation, a finance ministry official said on Saturday.
The US dollar fell the most in three weeks on Friday against a basket of six major currencies after Trump complained again about the greenback’s strength and about Federal Reserve interest rate rises.
The US president also lamented the strength of the dollar and accused the European Union and China of manipulating their currencies.
Trump is not trying to influence currency markets, Treasury Secretary Steven Mnuchin has said, reiterating that a strong US dollar reflects a strong US economy and is in the United States’ long-term interest.
“This time, the targets are China and the European Central Bank. But the content of criticism is the same so we need to be careful,” the Japanese official said in the Argentine capital.
The Bank of Japan has pursued an aggressive monetary stimulus to achieve its elusive 2% inflation target.
Despite five years of massive money printing, inflation has struggled to accelerate but the yen has steadily weakened.
China is the primary target, however, as Beijing accounts for the “bulk of the US trade deficit”, Japanese Finance Minister Taro Aso said.
Questions & Answers
Q.Why is Japan concerned about President Trump's recent remarks on currency strength?
Why is Japan concerned about President Trump's recent remarks on currency strength?
Japan is concerned because President Trump has criticised other nations' currencies before, and they need to ensure their monetary easing is not seen as aiming to weaken the yen but to beat deflation.
Q.What effect did President Trump's complaints about the strong dollar have on the currency market?
What effect did President Trump's complaints about the strong dollar have on the currency market?
The US dollar fell the most in three weeks against a basket of six major currencies after President Trump expressed his concerns about its strength.
Q.What is the main reason for the Bank of Japan's aggressive monetary stimulus policies?
What is the main reason for the Bank of Japan's aggressive monetary stimulus policies?
The Bank of Japan is pursuing an aggressive monetary stimulus in an attempt to achieve its long-standing 2% inflation target.
Q.Who does the Japanese Finance Minister believe is President Trump's primary target regarding currency manipulation claims?
Who does the Japanese Finance Minister believe is President Trump's primary target regarding currency manipulation claims?
Japanese Finance Minister Taro Aso believes China is the primary target for these claims, as it accounts for the majority of the US trade deficit.