German Chancellor Angela Merkel apparently criticized Japan for its credit-easing policy that led to the yen’s sharp depreciation against major currencies earlier this year, when she met with Japanese Prime Minister Shinzo Abe on Monday.
Merkel raised the issue of foreign exchange in the meeting and indicated current circumstances surrounding foreign exchange rates could harm the global competitiveness of cheap labor countries, a Japanese official told reporters.
Abe dismissed the criticism saying that his government was in no position to do anything about currency movements, the official indicated.
Merkel also asked Abe to explain how he intended to deal with the country’s snowballing fiscal deficit in the meeting on the sidelines of a summit of the Group of Eight major nations in Northern Ireland, Deputy Chief Cabinet Secretary Katsunobu Kato said.
Abe explained his three-pronged economic plan featuring aggressive monetary policy, massive fiscal spending and a growth strategy aimed at encouraging private-sector investment, according to Kato.
In January, Merkel blasted Japan in her remark that directly linked the depreciation of the yen at the time against major currencies, including the euro, to currency manipulation.
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