Japan, US finance chiefs confirm currency policy is their turf
G-20 ministers begin talks on sustaining growth
MARIKO HIRANO, Nikkei staff writer
WASHINGTON -- The finance ministers and central bank governors of the Group of 20 major economies began a two-day meeting in Washington on Thursday. The meeting is expected to stress unity in working to sustain global growth, which has been showing signs of recovery.
Ahead of the meeting, Japanese Finance Minister Taro Aso and U.S. Treasury Secretary Steven Mnuchin met and discussed their role following the first round of U.S.-Japan economic dialogue in Tokyo on Tuesday. Bank of Japan Gov. Haruhiko Kuroda will also attend the meeting.
Aso, who doubles as Japan's deputy prime minister, met with U.S. Vice President Mike Pence for talks in the Japanese capital before coming to Washington.
Speaking to reporters after the first day of the G-20 proceedings, Aso on Thursday night emphasized how he and Mnuchin had reaffirmed that excessive fluctuations in the currency markets negatively affect economic and financial stability. In addition, Aso said he told Mnuchin that free trade would make the current economic recovery even stronger.
Aso said he and Mnuchin agreed that it should be up to them to discuss the exchange rate in the context of the economic dialogue. U.S. President Donald Trump recently talked down the value of the dollar by saying that the greenback had become too strong.
According to officials accompanying the two men, Aso and Mnuchin also discussed options for using economic sanctions to curb North Korea's nuclear weapons development.
Since G-20 finance ministers and central bank governors met in Germany last month, there will be no joint communique issued after the current meeting.
At the March meeting, which was the first since Trump became U.S. president, members dropped the obligatory anti-protectionism line -- we resist all forms of protectionism -- in their joint communique at Washington's request.
On Thursday, International Monetary Fund Managing Director Christine Lagarde told a press conference that protectionist trade policies should be avoided, describing trade as a growth engine.
Kuroda told reporters on Thursday that as for currency policy, there are agreements between Group of Seven and G-20 economies, underscoring the existence of international rules such as that foreign exchange rates should not be a policy target.
Kuroda also said that monetary policy, including that of the BOJ, is a domestic policy and is carried out for price stability. There is a growing understanding that foreign exchange rates are not monetary policy targets, he said.
Meanwhile, Mnuchin on Thursday commented on the mooted introduction of a border adjustment tax proposed by House Republicans, saying he is concerned about the impact such a tax would have on the currency. It is believed such a tax would push up the prices of U.S. imports, which in turn would make the dollar stronger against major peers. Mnuchin implicitly expressed his concern about the currency appreciating too much by saying that if the currency is not appropriately valued, prices would go up, causing inflation and hurting consumers.
Recently, Trump has remarked that he thinks the dollar "is getting too strong." And a high-ranking U.S. official said that the issue will be put on the agenda at the latest G-20 meeting.
The IMF upgraded its outlook for general economic growth in 2017 in a report published on Tuesday. But it also voiced concern that the rise of protectionism might hamper economic recovery.