The G-20 nations on Saturday declared that there would be no 'currency war,' effectively letting Japan, which has been criticized for its expansive policies that have driven down the yen, off the hook. The yen has weakened by almost 21 percent against the greenback since mid-November, following the new Japanese government's radical moves to reflate the economy.
What Currency War? Move Along, G-20 Leaders Say
"Japan has repeatedly tried to explain that Japanese policies are taken to overcome deflation and, by all means, these are measures to overcome deflation as well as recession. That's what has been said in the second paragraph of the communique," added Aso.
When questioned about the recent breathtaking rally in the Japanese stock market and its potential of destabilizing the economy, Aso admitted he would have preferred a slower and steadier progression.
Prime Minister Shinzo Abe's radical new economic policies, referred to as "Abenomics," and expectations of a bold monetary policy have prompted Japanese shares to surge almost 32 percent in the last three months.
Aso: Yen Has Weakened More Than Intended
"It is always desirable to see stable stock prices. No one welcomes the jumping up and down of stock prices. This is not desirable for the Japanese economy," he said.
But Aso noted an encouraging trend: that investor sentiment seemed to be driving the recent stock market performance, a factor that has not been so influential in the past.
"Until this particular decision was made [Abenomics], we were wondering that even if a new government was formed there might not be sudden growth. But this time around, it turns out that sentiment went ahead of what was happening... it has been a pleasant surprise on our part that [investor] mentality played in this way and pushed the economy ahead," he said.