U.S., Japan Clash Over Yen Policy at G-7 Meeting................
Finance ministers and central bank chiefs end two-day meeting without an agreement on a more balanced policy mix
Taro Aso, Japan's deputy prime minister and finance minister, listens during a news conference following the Group of Seven meeting in Sendai, Japan, on Saturday.PHOTO: BLOOMBERG NEWS
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By Takashi Nakamichi and Mitsuru Obe
May 21, 2016 8:20 a.m. ET
SENDAI, Japan—Differences between the U.S. and Japan over the yen surfaced again Saturday, underscoring the difficulty the world’s leading economies face as they try to coordinate efforts to stoke global growth.
Group of Seven finance ministers and central bank chiefs ended a two-day meeting without an agreement on a more balanced policy mix, including additional, possibly coordinated fiscal stimulus, and aligning divergent monetary policies.
Policy makers have stressed in recent months that, given risks to the global economy, fiscal stimulus and structural reforms should be used to supplement the extraordinary monetary easing being conducted by central banks in the U.S., Europe and Japan. They have also reiterated that countries should avoid resorting to competitive currency devaluations to generate growth at the expense of other nations.
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Tokyo and Washington clashed over whether Japan should be allowed to arrest the yen’s recent rise. A sharply weaker yen, catalyzed by the Bank of Japan ’s easing policies, had been a key element of Prime Minister Shinzo Abe ’s growth program, but the currency has rebounded moderately since January.
Japanese Finance Minister Taro Aso said Saturday that he expressed concern about what he termed excessive movements in the yen to his counterpart, U.S. Treasury Secretary Jack Lew, on the sidelines of the meeting. Mr. Aso said he told Mr. Lew that “one-sided, speculative trades” have been seen in the market, something that Tokyo considers undesirable.
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“The movement seen over the past several weeks can’t be described as ‘orderly,’” Mr. Aso said at a news conference, reflecting his position that intervention may be warranted.
Japan will accept changes in the value of the yen as long as they are gradual, he added.
U.S. officials have disagreed with Japan’s assessment of the market, saying the currency moves have been orderly.
Mr. Lew, speaking at a news conference, stressed the importance of commitments among G-7 and Group of 20 nations not to intervene in currency markets.
“The conversations we’ve had here were consistent with the value of having frank and direct discussions on difficult subjects,” he said. “That’s a good thing for us to continue to do.”
A senior U.S. Treasury official said it would take the kind of surging strength seen in the yen around the time of a major earthquake and tsunami in northeastern Japan in 2011 for Washington to endorse intervention.
“You have to distinguish between the kind of crisis that was present in those circumstances from the kinds of fluctuations in the market that just happened,” the official said.
The U.S. joined Japan and the other G-7 nations in March 2011 to undertake joint intervention to drive the yen lower.
Mr. Aso said the yen’s exchange rate versus the U.S. dollar had become politicized in the U.S. because of the presidential campaign there and debate over the ratification of the Trans-Pacific Partnership trade agreement.
“It is important to continue dialogue and avoid getting emotional over the issue,” Mr. Aso said.
The comments follow a series of verbal jabs between the two countries over the yen. Mr. Aso recently threatened intervention to blunt the yen’s rise, while the U.S. has repeatedly warned against it.
The finance and central bank chiefs found common ground in their concern about the state of the global economy.
“What we