Europe, US criticize Japan’s moves to intervene in the currency market
Sept. 16, 2010 – The Japanese government on Wednesday drew criticism from the US and Europe as it intervened in world currency markets for the first time since 2004 to weaken the yen. It is believed that at least two trillion yen ($23 billion) were sold during the day.
The criticism against the government’s move is based on fears that the weakening of currency could start a domino effect, that other central banks have an argument to weaken their currencies and boost the competitiveness of their export sectors. Namely, Japan’s move gives China more ammunition in the battle to keep tight control over its yuan.
The US Congress is considering retaliatory measures against China for its alleged weakening of its currency. Some analysts believe Japan’s intervention is unnecessary as the country has a large trade and current account surplus, and they question how effective its actions will be in the long term.
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