Obama’s Got These Fighting Words for Japan
On Friday, the U.S. Treasury warned Japan not to weaken their currency. At the same time, they refrained from calling China currency manipulator. During its biannual assessment, the U.S. Treasury said that they were going to “closely monitor” Japan’s policies.
The new administration under Shinzo Abe has pushed for aggressive bond-buying by the Bank of Japan. Furthermore, the yen has dropped 13 percent against the dollar this year.
The Treasury said that they are going to continue pressing Japan so it meets its G7 and G20 commitments. The Treasury also said that they will press Japan to “remain oriented towards meeting respective domestic objectives using domestic instruments and to refrain from competitive devaluation and targeting its exchange rate for competitive purposes.”
China has avoided being labeled a currency manipulator by the United States because the yuan has appreciated and the current account surplus has dropped. China has not been named a currency manipulator since 1994 though as both Bush and Obama have been hesitant to disrupt trade tensions between the countries.
After China moved off the exchange-peg rate in 2010, the yuan has increased 10 percent. Additionally, the country’s current account surplus has decreased to 2.3 percent of gross domestic product in 2012 from the 10.1 percent it was in 2007.
The report was due Monday, but was postponed until later in the week. At international gatherings, the Federal Reserve Chairman Ben Bernanke has been on the defensive for central bank policies that have weakened the dollar.
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