Lew Says Japan Must Respect Rules on Yen
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.
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"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.
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."