Japan official urges caution over Trump's complaint on strong dollar
* Trump's complaint about strong dollar stirs market
* Japan worries BOJ easing may become target of criticism
* Aso calls for "free and fair trade" to spur global growth
* Japan seeks clarification of China's yuan policy at G20
(Adds quote, detail on FX, monetary policy; paragraphs 3-15)
By Scott Squires
BUENOS AIRES, July 21 (Reuters) - Japan should be careful
about recent remarks by U.S. President Donald Trump on
currencies and might need to convince Washington its monetary
easing is not aimed at weakening the yen but beating deflation,
a finance ministry official said on Saturday.
The U.S. dollar fell the most in three weeks on Friday
against a basket of six major currencies after Trump
complained again about the greenback's strength and about
Federal Reserve interest rate rises.
The U.S. president also lamented the strength of the dollar
and accused the European Union and China of manipulating their
Trump is not trying to influence currency markets, Treasury
Secretary Steven Mnuchin has said, reiterating that a strong
U.S. dollar reflects a strong U.S. economy and is in the United
States' long-term interest.
"This time, the targets are China and the European Central
Bank. But the content of criticism is the same so we need to be
careful," the Japanese official told reporters on the sidelines
of a G20 meeting in the Argentine capital.
"If necessary, we may need to remind the United States about
our past discussions on monetary policy" that is not targeting
currencies but domestic policy objectives, he added.
The Bank of Japan has pursued an aggressive monetary
stimulus to achieve its elusive 2 percent inflation target.
Despite five years of massive money printing, inflation has
struggled to accelerate but the yen has steadily weakened.
That could make Japan vulnerable to criticism of being a
currency manipulator as it remains on the U.S. Treasury's
China is the primary target, however, as Beijing accounts
for the "bulk of the U.S. trade deficit", Japanese Finance
Minister Taro Aso told reporters on the sidelines of the G20
meeting of finance ministers and central bank governors.
Rising trade tension has fuelled Japan's concerns over
currency volatility, which could prompt an appreciation in the
safe-haven yen and threaten its export-reliant economy.
Aso underscored the need to boost global growth through free
and fair trade, saying no country would benefit from pursuing
inward-looking policy through protectionist measures.
"Excessive current account imbalances should be resolved
through multilateral, not bilateral, framework," Aso added.
"The matter should be dealt with through macroeconomic
policy and structural reform by rebalancing savings and
investments, instead of imposing tariffs."
Aso voiced concerns at the G20 that acceleration of monetary
policy normalisation in advanced economies could weaken emerging
market currencies and cause capital outflows from countries such
At the meeting, Japan asked China for clarification of its
yuan currency policy, seeking factors behind its depreciation.
(Reporting by Scott Squires in Buenos Aires;
Writing by Tetsushi Kajimoto in Tokyo;
Editing by Clarence Fernandez)
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