Fujii Says Weak-Currency Policies Aren’t Desirable

By Keiko Ujikane

Oct. 6 (Bloomberg) -- Japanese Finance Minister Hirohisa Fujii said he told Group of Seven officials that governments worldwide shouldn’t pursue policies that seek to devalue their currencies.

“I made the point that it’s undesirable for individual nations to take a weak-currency policy,” Fujii said at a news conference in Tokyo today. “Currency devaluation policies back in the 1930s had an adverse impact on the global economy and politics.”

Officials expressed “various opinions on the weakening of the dollar” at the G-7 meeting in Istanbul last weekend, he said, while declining to comment on foreign-exchange rates. The slide in the U.S. currency has sparked concern from Canada to France over the potential impact on economic recoveries.

Fujii indicated at the gathering that Japan is open to intervening in the currency market to stem gains in the yen, which rose to an eight-month high against the dollar last week. He said the government “will take action” should currencies “show excessive moves in a biased direction.”

Fujii also said today that he wasn’t aware of a newspaper report that Gulf states may start to move to a basket of currencies, rather than the dollar, for oil trading. When asked about the report, the minister said he “doesn’t know anything about it.”

Started Talks

Arab states have started talks with China, Russia, Japan and France to stop using the U.S. currency for settling oil transactions, the Independent newspaper reported, citing Middle Eastern and Chinese banking officials it didn’t name.

The dollar fell for a second day against the Japanese currency after the report, trading at 89.13 yen at 1:24 p.m. in Tokyo from 89.53 yen in New York yesterday.

Separately, Fujii said he hadn’t heard whether the Bank of Japan will this month consider deciding to let its programs of purchasing corporate debt expire at the end of the year.

The central bank “will judge what is appropriate for corporate funding,” he said, adding that he’s “confident” it won’t pursue actions that risk undermining the recovery.

Bank of Japan Governor Masaaki Shirakawa said on Oct. 3 that the need for the programs of buying commercial paper and corporate bonds has eased as companies regain access to funding in the markets. The central bank may decide as soon as this month to let the measures expire at the end of the year, people with direct knowledge of the discussions have said.

Fujii said that the central bank decides monetary policy in a way that complements the government’s economic goals.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net