By Hironori Kanashima / Yomiuri Shimbun Staff Writer The U.S. Treasury Department did not brand China a currency manipulator subject to sanctions in a report it released on Friday but included Japan on a monitoring list, putting pressure on the Japanese government, which wants the depreciation of the yen against the dollar to continue.
However, the Japanese side has no intention of discussing foreign exchange policy in the Japan-U.S. economic dialogue that will start on Tuesday.
Also, the lineup of participants on the U.S. side is yet to be finalized, making it less likely that Washington will bring up the subject in the first round of the talks.
The Japanese side believes that “full-fledged discussions will take place in the second round of the session or later, when the U.S. side is ready for talks,” according to a Japanese government source.
Tokyo is on guard that Washington may launch an offensive on the currency issue as the economic dialogue proceeds.
Finance Minister Taro Aso, who is also deputy prime minister, and U.S. Vice President Mike Pence are scheduled to attend the first round of talks to be held in Tokyo.
Kenneth Juster, deputy assistant to U.S. President Donald Trump, was also slated to join the talks as a key official supporting Pence, but he is now off the list of final attendees due to domestic affairs.
Thus, the Japanese government now “cannot expect the two sides to advance the dialogue in a practical manner in the first round of the talks,” according to a Japanese government source.
Japan hopes to contain Washington’s criticism on the depreciation of the yen by showing that Tokyo is tackling the issue through Aso’s close cooperation with U.S. Treasury Secretary Steven Mnuchin outside the framework of the economic dialogue.
The Japanese government is trying to set up meetings between the Japanese and U.S. finance ministers in late April and also in May during the Golden Week holidays.
However, it is unclear whether matters will go as Japan hopes.
The report warned Tokyo that “The treasury’s expectation is that in large, freely traded exchange markets, intervention should be reserved only for very exceptional circumstances with appropriate prior consultations.”
Even if the yen sharply appreciates against the dollar, it would be difficult for Japan to practice yen-selling intervention for some time.
If a trend for a higher yen continues in the exchange markets, it will harm exporting companies that are leading the Japanese economy.
Under such circumstances, some are concerned about the coming talks.
The Japanese government source said, “The U.S. side may use tactics to gain concessions from Japan in other areas like automotive trade by indicating the currency issue is a subject to be discussed in the economic dialogue.”Speech