U.S. policymakers are “pretty clear” in their views that Japan should refrain from any steps to intentionally weaken the yen, such as intervention in currency markets, a key economic adviser to Prime Minister Shinzo Abe said on Wednesday.
Japanese financial authorities thus face a tough situation, with few options to contain unwelcome yen rises, said Koichi Hamada, an emeritus professor at Yale University who has close contacts with senior U.S. and Japanese policymakers.
“U.S. authorities have been pretty clear in their views that they don’t want Japan to do anything to weaken the yen further,” Hamada told a seminar in Tokyo after having met several senior policymakers in the United States.
“For Japan, it would be a choice of enduring (unwelcome yen rises) a bit longer, or intervene in the market,” knowing that doing so could anger the United States, he said.
Japanese policymakers have escalated their verbal warnings to investors against pushing up the yen too much, with the finance minister saying Tokyo will intervene if “one-sided” yen rises last long enough to hurt the economy. Read more