BOJ stimulus not aimed at yen slide: Abe

Tokyo

PRIME Minister Shinzo Abe on Tuesday staved off criticism that Japan's ultra-loose monetary policy was aimed at weakening the yen, as its fall to a seven-year low against the dollar sowed unease among rival exporting nations, such as South Korea.

Speaking in Beijing, Mr Abe stressed that markets should determine exchange-rate moves, and said that the Bank of Japan's strategy was aimed at ending deflation and reviving growth, not at weakening the yen. "The Group of 20 nations recognise the BOJ's stimulus programme is aimed at ending deflation and supporting domestic demand," Mr Abe told a news conference at an Asia-Pacific Economic Cooperation (Apec) summit. "Japan abides by the agreement of G-7 and G-20 nations that currency rates ought to be determined by markets. I understand other countries do so too."

The Japanese leader's remarks came after the yen dropped to seven-year lows and the Nikkei average hit a seven-year high on talk that Mr Abe may delay a second increase in sales tax, scheduled next year.

Some countries, such as South Korea, have complained that Japan is giving its exports an unfair trade advantage by weakening its currency. Mr Abe said that in general, a weak yen benefited exports and companies with operations overseas.

But he said he was mindful of the pain that yen falls inflict on small, regional firms suffering from rising import costs, and he was ready to take steps to ease the pain. The BOJ deployed a burst of monetary stimulus in April last year and stunned markets by expanding it last month, on hopes that the money would help achieve a target of accelerating inflation to 2 per cent next year. REUTERS