Fri, May 10, 2013 - Page 13 News List

Asian currency war unlikely: ‘Mr Yen’

By Camaron Kao  /  Staff reporter

A currency war in Asia is unlikely because the yen will not depreciate significantly in the near term, former Japanese deputy minister of finance Eisuke Sakakibara said yesterday in Taipei.

The yen is likely to remain between ¥95 and ¥100 against the US dollar in the next five months, Sakakibara, known as “Mr Yen,” told a press conference held by the Chinese-language weekly Business Today (今周刊).

The Japanese government has completed all the measures it planned to undertake, and the market has already reacted accordingly, Sakakibara said, adding that a more aggressive monetary policy in the future is unlikely.

A currency war would only be likely if the yen depreciated to between ¥110 and ¥120 against the US dollar, which would be lower than its level in 2008, before the US and Europe began quantitative easing measures, Sakakibara said.

The monetary easing conducted by Europe and the US caused the yen to appreciate to ¥80 from ¥100 against the greenback, and now the yen has returned to its previous level, he said.

“What [Bank of Japan Governor] Haruhiko Kuroda did was only a belated quantitative easing,” he said.

Under Kuroda, the bank did not intervene in the foreign exchange market, but enacted policies to increase money supply, which was accepted and well-understood by other G20 members, Sakakibara said.

“What [Bank of Japan Governor] Haruhiko Kuroda did was only a belated quantitative easing,” he said.

Furthermore, Sakakibara said that under Kuroda, the bank never intervened in the foreign exchange market, but conducted monetary policy to increase money supply, which was accepted and well-understood by other members in the previous G20 meeting.

Capital inflows resulted from the rising stock market in Japan also prevent the yen from further depreciating, former Asian Development Bank chief economist Lee Jong-wha said at the conference.

Asked how the South Korean government would respond to the yen’s depreciation, Lee said it would put emphasize fiscal policy over monetary policy.

“Based on the [South] Korean perspective, the more significant government role should come from the fiscal side, because the [South]Korean government has a more sound fiscal balance,” Lee said.

Lee said Seoul had already passed a US$15 billion stimulus plan to boost its economy.

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