Ja­pan’s fi­nance min­is­ter Aso warns main­land China on cur­rency moves

The China Post - - WORLD BUSINESS - BY ELAINE KURTEN­BACH

Ja­pan’s fi­nance min­is­ter, Taro Aso, said Fri­day that re­cent moves by China to al­low its cur­rency to de­pre­ci­ate are a con­cern and could pose prob­lems for Tokyo.

The Ja­panese share bench­mark, the Nikkei 225 in­dex, fell 3 per­cent to 19,435.83 on Fri­day, slip­ping be­low the psy­cho­log­i­cal bench­mark of 20,000 on selling of shares in many dif­fer­ent sec­tors.

“Chi­nese fac­tors are a big part of this, with­out a doubt,” Aso told re­porters dur­ing a reg­u­lar news brief­ing early in the day.

Fur­ther de­val­u­a­tion of the main­land Chi­nese yuan could put Ja­pan in a “tough spot,” the Nikkei news­pa­per and other lo­cal media quoted Aso as say­ing.

It was un­clear what

sorts

of choices Aso was im­ply­ing Ja­pan might make, but the Ja­panese cur­rency, the yen, has fallen by over 60 per­cent against the U.S. dol­lar since hit­ting a peak of 75.35 yen to the dol­lar in Oc­to­ber 2011. It was trad­ing near 123 yen per dol­lar on Fri­day.

The yen’s de­pre­ci­a­tion was has­tened by mas­sive mon­e­tary eas­ing since 2013 by the Bank of Ja­pan, which is buy­ing tril­lions of yen in as­sets each month, seek­ing to spur growth.

The i njec­tion of mas­sive amounts of cash into the econ­omy drove the value of the yen lower, while in turn boost­ing prof­its of ma­jor cor­po­ra­tions that earn a large share of their rev­enue over­seas — and push­ing share prices higher.

The strat­egy is the back­bone of Prime Min­is­ter Shinzo Abe’s ef­fort to staunch de­fla­tion, or fall­ing prices due to weak de­mand, and spur growth by per­suad­ing con­sumers and com­pa­nies to spend more.

The main­land Chi­nese cur­rency’s de­cline against the U.S. dol­lar has had a lim­ited di­rect im­pact on the value of the yen. But un­cer­tainty over fu­ture pol­icy and over im­pact of China’s eco­nomic slow­down is re­ver­ber­at­ing across global mar­kets.

“It’s not just China. It’s the emerg­ing mar­kets in gen­eral,” said Masamichi Adachi of JPMor­gan in Tokyo.

“At the end of the day, it’s all com­ing from China. Brazil, South Africa, many coun­tries are com­mod­ity ex­porters and the fi­nal des­ti­na­tion is all go­ing to China.”

AP

In this Jan. 26 file photo, Ja­pan’s Fi­nance Min­is­ter Taro Aso speaks dur­ing a open­ing ses­sion at the lower house of Par­lia­ment in Tokyo.

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