Japan is taking “natural steps” in trying to buoy its economy through a more expansionary monetary policy and a weaker yen, Swedish Finance Minister Anders Borg said.
“Once you’ve cut the interest rate and can’t do more with that, then probably the most effective way to achieve a more expansionary monetary policy, one of the most effective ways, is to intervene in your own exchange rate so that you in that way achieve a weakening of the currency and support economic growth,” Borg said yesterday in Gothenburg, Sweden.
Japan’s currency slid yesterday to its lowest against the dollar since 2010 amid speculation Prime Minister Shinzo Abe will nominate a central bank chief who favors stimulus. Moves by the world’s third-largest economy to revive growth through a weaker yen have raised concerns over a so-called currency war as central bankers from New Zealand to Norway signal they’re ready to stem exchange rate swings.
One notable exception has been Sweden, where policy makers argue the krona’s gains are justified and likely to last. Borg said earlier this year that Swedish businesses must accept the currency’s strength and predicted depreciation is unlikely for a “couple of years.”
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