China Commerce Minister Warns US, EU and Japan about Devaluation

China’s commerce minister appealed Friday to other major governments to avoid suppressing the value of their currencies to boost exports, warning that could hurt global growth.

Chen Deming was responding to a question at a news conference about the Japanese yen’s weakness but said his appeal also was directed at the United States and Europe.

The yen has fallen by about 20 percent against the dollar since the middle of last year, prompting concern other governments might respond by driving down their currencies to keep exports competitive.

“I’m worried that ‘competitive devaluation’ will lead to oversupply of money and it will have a negative effect on global economic growth,” Chen said.

The new Japanese prime minister, Shinzo Abe, has called publicly for a weaker yen to help exporters compete. His government has not directly intervened in currency markets but its policies have convinced traders it will create new money, eroding the Japanese currency’s value.

Several developing economies also have criticized the U.S. Federal Reserve’s program of bond-buying, dubbed quantitative easing, for pushing up the value of their currencies relative to the dollar.

via Mainichi

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