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| U.S. Signals Support for Japan’s Yen Policy | |
| (about 1 hour later) | |
| MOSCOW — Ben S. Bernanke, chairman of the U.S. Federal Reserve, on Friday strongly indicated that the Group of 20 industrialized nations did not intend to censure Japan for weakening its currency over the past several months, something that has aided Japanese exporting companies and angered its competitors. | MOSCOW — Ben S. Bernanke, chairman of the U.S. Federal Reserve, on Friday strongly indicated that the Group of 20 industrialized nations did not intend to censure Japan for weakening its currency over the past several months, something that has aided Japanese exporting companies and angered its competitors. |
| Mr. Bernanke, who has advocated loose monetary policy in the United States to stimulate the economy, suggested that distinctions should be drawn among the reasons a country was pumping money into its system, which could in turn weaken its currency. | Mr. Bernanke, who has advocated loose monetary policy in the United States to stimulate the economy, suggested that distinctions should be drawn among the reasons a country was pumping money into its system, which could in turn weaken its currency. |
| “The United States is using domestic policies to advance domestic agendas,” Mr. Bernanke said in brief introductory remarks at a conference in Moscow of the G-20, a club of the world’s wealthiest countries. “We believe that by strengthening the U.S. economy, we are helping to strengthen the global economy as well. We welcome similar approaches by other countries.” | “The United States is using domestic policies to advance domestic agendas,” Mr. Bernanke said in brief introductory remarks at a conference in Moscow of the G-20, a club of the world’s wealthiest countries. “We believe that by strengthening the U.S. economy, we are helping to strengthen the global economy as well. We welcome similar approaches by other countries.” |
| The comments come after a statement by the Group of 7 industrialized countries issued this past week caused turmoil in currency markets by suggesting that they would take a collective stand against any country that was intentionally weakening its currency. | The comments come after a statement by the Group of 7 industrialized countries issued this past week caused turmoil in currency markets by suggesting that they would take a collective stand against any country that was intentionally weakening its currency. |
| At issue is a stimulus program under way in Japan to revive the country’s economy, which was begun last autumn by Prime Minister Shinzu Abe, who advocates supporting Japanese manufacturers through loose monetary policy. As a result, the yen has lost about 20 percent of its value against the dollar, meaning products produced in Japan, like some Sony electronics or models of Toyota cars, are relatively less expensive. | At issue is a stimulus program under way in Japan to revive the country’s economy, which was begun last autumn by Prime Minister Shinzu Abe, who advocates supporting Japanese manufacturers through loose monetary policy. As a result, the yen has lost about 20 percent of its value against the dollar, meaning products produced in Japan, like some Sony electronics or models of Toyota cars, are relatively less expensive. |
| Japan’s maneuver touched off fears that other countries and the European Union might follow suit in a so-called currency war, or competitive devaluations, which has been the main topic of the G-20 meeting here on Friday and Saturday. | Japan’s maneuver touched off fears that other countries and the European Union might follow suit in a so-called currency war, or competitive devaluations, which has been the main topic of the G-20 meeting here on Friday and Saturday. |
| Mr. Bernanke said he endorsed an earlier statement at the meeting from Christine Lagarde, the director of the International Monetary Fund, who stated that the risk of a currency war was “overblown.” | Mr. Bernanke said he endorsed an earlier statement at the meeting from Christine Lagarde, the director of the International Monetary Fund, who stated that the risk of a currency war was “overblown.” |
| Initially, it seemed that the world’s largest economies might agree on a firm statement at the end of the G-20 summit meeting to condemn a currency war. That tactic is now widely seen as harming a global recovery, and is understood to be a cause of the lingering depression in the 1930s. | Initially, it seemed that the world’s largest economies might agree on a firm statement at the end of the G-20 summit meeting to condemn a currency war. That tactic is now widely seen as harming a global recovery, and is understood to be a cause of the lingering depression in the 1930s. |
| But Reuters, citing an official that had seen a draft G-20 statement, reported earlier Friday that the communiqué did not single out Japan for censure. | But Reuters, citing an official that had seen a draft G-20 statement, reported earlier Friday that the communiqué did not single out Japan for censure. |
| In her statement to the group, Ms. Lagarde said the recovery in the global economy had become unbalanced. Developed nations are struggling to grow, while emerging markets have bounced back quickly after the financial crisis of 2008-9. Those countries, including Russia, have been critical of developing nations’ stimulus efforts. But Ms. Lagarde defended Japan’s efforts to weaken the yen, saying it was “sound policy.” | In her statement to the group, Ms. Lagarde said the recovery in the global economy had become unbalanced. Developed nations are struggling to grow, while emerging markets have bounced back quickly after the financial crisis of 2008-9. Those countries, including Russia, have been critical of developing nations’ stimulus efforts. But Ms. Lagarde defended Japan’s efforts to weaken the yen, saying it was “sound policy.” |
| “The international monetary system can function effectively if each country follows the right policies for their domestic economies,” she said. That, in turn, should lift the tide of the global marketplace, she said. | “The international monetary system can function effectively if each country follows the right policies for their domestic economies,” she said. That, in turn, should lift the tide of the global marketplace, she said. |
| Ms. Lagarde did caution that too bald a ploy to prop up exports would not count as a justified weakening of a currency. | Ms. Lagarde did caution that too bald a ploy to prop up exports would not count as a justified weakening of a currency. |
| Germany’s finance minister, Wolfgang Schäuble, offered a contrarian view, saying that countries should not count on easy monetary policy to help reduce their deficits over the long term while avoiding steps to reduce spending. | Germany’s finance minister, Wolfgang Schäuble, offered a contrarian view, saying that countries should not count on easy monetary policy to help reduce their deficits over the long term while avoiding steps to reduce spending. |
| The Russian finance minister, Anton Siluanov, the host of the meeting, has also been pushing for the forum’s final communiqué, which is expected Saturday, to include a strong statement against competitive devaluations. Mr. Siluanov said in his opening remarks that a statement allowing markets to set exchange rates would find “a place in the communiqué.” | The Russian finance minister, Anton Siluanov, the host of the meeting, has also been pushing for the forum’s final communiqué, which is expected Saturday, to include a strong statement against competitive devaluations. Mr. Siluanov said in his opening remarks that a statement allowing markets to set exchange rates would find “a place in the communiqué.” |