Japan: let the yen weaken (Financial Times)
fxstreet.com
The Japanese government on Wednesday signalled that it was content to let the yen weaken against the dollar and euro, as the yen fell to a new 17-month low against the US currency.
Kiichi Miyazawa, finance minister, reiterated his recent comments that currency movements "should be left to the markets" - which has traditionally meant the authorities were not planning to intervene.
Meanwhile, Haruhiko Kuroda, vice-minister of finance for international affairs, said that he hoped that the euro would strengthen further against the yen and the dollar, since it had been "out of line with fundamentals".
The decline in the yen has come as a deep relief to many Japanese officials, who hope that it may help offset other recent signs of a slowdown in Japan.
However, Japanese officials yesterday denied that they were specifically seeking a weak yen to boost the ailing economy. Instead, Mr Kuroda argued that the economic recovery was likely to "broaden and deepen" in the coming months.
Nevertheless, the outlook for currencies is likely to provide a key topic for discussion when Asian and European finance ministers meet in Kobe, Japan, this weekend. In particular, there is concern among some US and European officials that a sudden downward slide in the yen could force other Asian countries to weaken their other currencies - creating a new spiral of competitive devaluation.
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