USA tries to bully Japan not to tame yen

The warning came in talks on the sidelines of a G7 meeting where Japan’s actions have set it on a collision course with its counterparts, including the United States and Germany, which have ruled out such moves.

The topic has been high on the agenda at the two-day meetings in northern Japan and Lew had made similar comments on Friday. In his meeting with Japanese finance minister Taro Aso, Lew said that “commitments made by the G-20... to refrain from competitive devaluation and communicate closely have helped to contribute to confidence in the global economy in recent months”, the US Treasury Department said.

Aso has repeatedly said he would not hesitate to approve intervention to curb a surge in the yen, and that moves to halt the currency’s “speculative” rally would not breach the G20 agreement. 

Washington DC’s policy is that the yen’s recent strengthening, which has dealt a blow to Japan’s exporters as the economy is hit by a slowdown, did not justify a market intervention.Saturday’s meeting comes several weeks after Washington DC placed Japan on a forex watchlist. Japan last intervened in currency markets around November 2011, when it tried to stem the yen’s rise against the greenback to keep an economic recovery on track after the quake-tsunami disaster earlier that year. A stronger yen hurts Japanese exporters, a key driver of the world’s third largest economy, by making their products relatively more expensive overseas. 

Meanwhile, Britain’s possible exit from the European Union took centrestage at a G7 meeting in Japan on Satur, as UK finance minister George Osborne warned a ‘Brexit’ could doom trade deals with EU countries. The comments came during two days of talks largely focused on how the club of rich nations can stoke the lumbering world economy.

As the vote on Britain’s future in the EU draws closer, Osborne said his meetings with G7 counterparts underscored the gravity of the in-out decision next month. “If Britain left the EU, and wanted access to the single market... then we would need to pay into the EU budget and we’d have to accept free movement of people but we’d have no say over those policies at all,” Osborne told the BBC.

Britain will decide in a referendum on June 23 whether to stay in the 28-country bloc. Chancellor of the Exchequer Osborne, like Prime Minister David Cameron, is campaigning for Britain to stay in. 

“If we left the EU we would have a two-year period to negotiate our exit with 27 other countries, we’d then have to negotiate new arrangements... and at the same time conclude over 50 trade deals with countries that aren’t even in Europe,” he said. “That would be extremely difficult to do.” 

During that period, businesses would have “no certainty” about the future and so would not take on new workers or invest, he said. “It hits people’s incomes, it hits the value of houses, it hits businesses and jobs.

 People are beginning to understand that,” said Osborne. European Economic Affairs Commissioner Pierre Moscovici, attending the meetings at a famous hot spring resort in northern Japan, said the G7 — which also includes the US, Japan, Germany, France, Italy and Canada — backed Britain remaining in the EU.