Newly appointed South Korean Finance Minister Hyun Oh-seok revived his nation’s concerns over weakness in the yen and said that the G20 nations should revisit the issue.
“Japan’s expansionary policies are having various ripple effects on many countries,” Hyun, 62, told reporters on Saturday in Bundang, on his second day as finance minister. “The yen is depreciating, while the won is gaining and this is flashing a red light for South Korea’s exports.”
Bank of Japan Governor Haruhiko Kuroda is poised to boost monetary easing, expanding a campaign to defeat deflation that triggered an 11 percent decline in the yen against the US dollar in the past three months. South Korea expressed concerns about the currency’s slide before and after last month’s meeting of the G20 in Moscow, where that organization refrained from criticizing Japanese policies.
South Korean officials are concerned at the yen’s slide because the nation depends on exports for economic growth and competes in overseas markets with Japanese manufacturers of cars and electronics.
At the Moscow meeting, G20 nations pledged not “to target our exchange rates for competitive purposes,” without any censure of Japan for the yen’s decline.
Japan’s government says it is not targeting the yen, with declines in the currency a side-effect of efforts to spur a sustained recovery in the world’s third-biggest economy.
Officials have pushed back at international criticism of Japanese policies, with Japanese Deputy Minister of Economy, Trade and Industry Yasutoshi Nishimura alleging in an interview on Jan. 24 that South Korea tries to manage its currency.
“While the yen is traded completely openly, there may be intervention on the won and the country has fixed regulations on foreign investments,” he said.
The yen weakened yesterday after a EU announcement that Cyprus reached an agreement on an international bailout.
The Japanese currency fell 0.4 percent to ￥94.84 per US dollar as of 11:31am in Tokyo, while the won strengthened the most in almost three weeks, rising 0.5 percent to 1,113.20 won per US dollar.
“While we will do what we can, we need international cooperation to deal with the weak-yen problem,” Hyun told reporters. “This should be discussed at the G20.”
Hyun said on Saturday that stabilizing foreign-exchange markets should always be an important part of government policy, since currency moves can be a source of shocks.
South Korean Minister for trade, Industry and Energy Yoon Sang-jick also underscored the importance of stability in the foreign-exchange market, in e-mailed comments on Sunday.