This is an interesting development in response to Abenomics and the Japanese policy to drive down the Yen versus the Dollar. The US Treasury is finally taking note of the extreme slide in the Yen and realizing that Japan’s gain is the USA’s loss. After all, that’s how FX works. Japan’s policy is not contributing to global growth. Rather, it’s simply taking growth from other countries. In this case, it’s the USA who’s losing out to Japanese exporters. We’ve already seen several earnings reports this quarter warning about the slide in the Yen and how it might impact revenues.
Via the WSJ:
The U.S. said it would “closely monitor” Japan’s economic policies to ensure they are aimed at boosting growth, not weakening the value of the currency. The yen is now hovering near a four-year low against the dollar, in response to Mr. Abe’s policies.
“We will continue to press Japan…to refrain from competitive devaluation and targeting its exchange rate for competitive purposes,” the Treasury report said.
This is most likely all talk though. The USA doesn’t tend to get involved directly in FX intervention.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.