Japan Clarification Of Yen Currency In G-20 Meeting

Threat of currency war fears triggered by the Japanese government policy loosening monetary policy and fiscal stimulus poured in order to suppress the yen. The weaker yen is believed to be able to increase export competitiveness, so that Japan can get out of recession and deflation.

Global currency war becomes a hot issue in the G-20 meeting in Moscow, Russia this week. Forum G-20 trying to find a deal to address policy expansive want to drag down the Japanese yen's exchange rate, in order to pursue inflation and increased exports.

Policy to weaken the yen is feared will be followed by other industrialized countries. This then triggers a currency war fears. Previously, China has also been accused of weakening the yuan. Russia, the host of the G-20, pushed for a currency war is not going to ask for a strong commitment against exchange rate manipulation.
Russian Finance Minister Anton Siluanov, said the G-20 should be more specific set of government intervention to influence exchange rates. "G-20 country to hold the position, currency policy should be based on market conditions," he said.

The G-20 represents almost 90% of the global economy. Two-day meeting was overshadowed by the threat of an international currency war that triggered the devaluation policy yen. Unlike a conventional war, a currency war going on for a number of countries in order to encourage the exchange rate weakening exports more competitive.

Japan's economic growth report three months 2012 that showed the recession, has raised concerns about the intentions of the Government of Japan to boost monetary stimulus to keep down the value of the yen. The yen has fallen 17% against the U.S. dollar (U.S.) in three months.

The draft communique of the G-20 shows, finance officials developed and developing countries, will refrain from devaluing. They also promised to better monitor the monetary policy that would disrupt the balance of the exchange rate. "We reaffirm our commitment to refrain from devaluation, resist protectionism and maintain open markets," the promise of the G-20.

The promise was reiterated statements industrialized countries in the G-7 before. In a joint statement, the seven industrialized countries, namely Canada, England, France, Germany, Italy, Japan and the United States promised not to use domestic policy and the exchange rate target.

This statement is a criticism of the Japanese government continues to deny monetary stimulus policies to regulate the devaluation of the yen. Prime Minister of Japan, Shinzo Abe, said loose monetary policies aimed at ending deflation and revive the economy in recession.

G-20 will hit Japan in order to clarify its policy in regulating the movement of exchange rates. "They should be able to explain what decisions they take and exchange rate policy which they will do," he said. One issue in the G-20 is how the foreign bond purchases could affect exchange rates. Japan intends to buy up foreign bonds in order to suppress the yen.

Harry Pattikawa, Credit Risk Portfolio Analyst DHB Bank Rotterdam, Netherlands, said the validity of the theory of currency war remains to be tested time. "In practice, the Fed, the ECB and the Bank of Japan just run the central bank's mandate as an independent and not overly influenced uproar rhetoric of politicians," he explained