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Business
Japan Criticized for Currency Unilateralism
Sunday, September 19, 2010
Fukuzawa
Tokyo -- The Kan administration's bold intervention in the currency markets last Wednesday continues to attract a smattering of international criticism.
Today it was the turn of Bank of Korea Governor Kim Choong-Soo, who declared, "Japan, alone, cannot resolve the problem of the strong yen... Japan will need policy coordination with others, including the U.S. and China. The effect is limited when one country tries to handle the issue by market intervention."
In many respects, Kim's comments are simply a restatement of textbook economics. On the other hand, it is far from clear how Tokyo could possibly achieve policy coordination with countries like the United States and China when they themselves are at loggerheads over currency valuation issues.
In this connection, strong words were aimed at Tokyo by some members of the US Congress, including Sander Levin (D-Michigan) and Christopher Dodd (D-Connecticut).
Dodd, who serves as Senate Banking Committee Chairman, told Bloomberg Television on Friday that Japan was "manipulating" its currency.
"This is a complete violation, of course, of the agreements that have been in place," Dodd commented.
On Thursday, Luxembourg Prime Minister Jean-Claude Juncker also criticized Tokyo's move, saying that in the Euro countries they "don't like unilateral intervention."
On Wednesday, Japan sold a large amount of yen - now estimated at about 1.8 trillion yen (more than US$20 billion). This move surprised the market and succeeded in lowering the value of the yen by about 3%, providing some degree of temporary relief for Japanese exporters.
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