GO
Loading...

Lew Says Japan Must Respect Rules on Yen

Doug Armand | Photographer's Choice RF | Getty Images

U.S. Treasury Secretary Jacob Lew has said Japan must stay within the bounds of an international agreement not to target exchange rates, after the dollar-yen broke through 100 and continued to extend gains on Friday.

Lew declined to criticize Japan and said he wouldn't comment on day-to-day moves in the yen, but he added that recent G20 meetings in Washington and Moscow had affirmed an international policy agreement over currency devaluation.

(Read More: Debt Ceiling Won't Be Reached Till Labor Day: Lew)

"The world has made clear that domestic tools that are designed to deal with domestic growth are within the bounds of what the international community thinks is appropriate and that policies that are targeted to affect exchange rates are not," Lew told CNBC's Steve Liesman in an interview in London.

The Japanese yen has weakened 17 percent against the dollar since the start of the year after the Bank of Japan unveiled a quantitative easing policy that seeks to target a 2 percent inflation rate by doubling its monetary base.

The yen hit a new four-and-a-half year low against the dollar on Friday at 101.66 yen, after breaking through the 100-mark on Thursday afternoon.

(Read More: Capital Flight From Japan: Yen Downfall Just the Start?)

Lew said he recognized Japan's need for growth after decades of deflation, but he said the U.S. government was keeping an eye on it.

"Growth is really important, as long as the policies stay within those bounds. Japan has growth issues for a long period of time – as long as they stay within the bounds of those international agreements I think growth is an important priority," Lew said on the sidelines of the G7 meeting of finance ministers and central bankers in London.

Asked whether Japan was within those bounds, Lew said: "We've made it clear we're going to keep an eye on that."

Banks

  • Frank Keating, American Bankers Association CEO, discusses why it is extremely important for banks to be safe from cyberattacks.

  • In a series of coordinated attacks, at least 5 financial institutions including JPMorgan have been hacked. CNBC's Eamon Javers has the details.

  • Former FBI assistant director Chris Swecker, discusses the recent hack attack on U.S. banks and what will be done with the information. Swecker says U.S. banks are far and away the favorite targets of Russian hackers.