The US and Europe are right to continue to put pressure on China while ignoring measures to protect the currency taken by countries like Japan because its economic situation is not good, Bob Parker, senior advisor at Credit Suisse, told CNBC Wednesday.
Japan cut its interest rate to zero on Tuesday, after the central bank tried but failed to weaken the yen by intervening directly in the foreign exchange markets last month.
"Find me today one positive Japanese economic indicator, because I can't," Parker said.
Loss of trust in global markets is Parker’s biggest worry.
"Japan has a fundamental problem which is that as Japanese retail investors… lose trust in global markets, they repatriate money back into yen money market funds, which is why the yen is strong," he explained.
"That results in the import price index declining sharply as it has in last three months, which entrenches deflation," Parker added.
But Japan "has all these protective barriers to do business," UK Foreign Secretary William Hague told CNBC.
"If they relax it then the EU can let Japanese goods in, and both sides become richer," Hague said.
The strength of the euro isn’t a problem for certain countries, but is a going to create problems for others, Parker said.
“German union labor costs have declined in excess of 10 percent, so Germany is very competitive,” he said.
The problem lies instead in countries like Spain, with high unemployment levels, and Greece, with its bulging debt.
“They aren't as competitive and that's the structural problem within Europe,” Parker said.
If the euro appreciates above $1.40, then there will be scope for it strengthening further, he predicted.