Nukaga: Want G7 To Discuss Policy Coordination
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TOKYO -Japanese Finance Minister Fukushiro Nukaga said Monday he wants to find areas where the Group of Seven industrialized countries can work together to deal with recent global market turbulence at the group’s meeting next week.
“As chairman of the meeting, I want to discuss where policy coordination is possible among the G7 members (in response to recent instability global financial markets) at the meeting, and I want to issue a message,” Nukaga told a budget committee at the Lower House of Parliament.
But he said each G7 member must first understand its own situation and take appropriate policy responses.
“Before coordinating policy, each country must first grasp its own financial markets’ and economy’s situations and take steps. Building on these steps, we’d like to find out where coordination is possible among the G7,” he said.
Nukaga’s qualified remarks on policy coordination suggest it may be hard for the G7 nations to cobble together a concerted plan of action for dealing with the market jitters because of differences in the state of their economies.
The Japanese finance minister also said he wants to hear more at the meeting about the U.S. subprime loan issue and how it is affecting the U.S. economy.
“The current falling global stock prices and financial market instability stem from the U.S. subprime issue. I’d like to know how the problem is being addressed by the U.S. at the (G7) meeting.”
At the same Lower House committee session, BOJ Gov. Toshihiko Fukui said the recent falls in Japanese stock prices are partly the result of a stronger yen.
“Investors’ proclivity to take risks has receded” amid uncertainties over the global economic outlook, and “that’s basically a common factor that has driven Japanese stocks lower,” along with share markets in other countries, Fukui said. But “there’s a possibility that the yen’s strength may (also) have been another factor causing stock prices to fall,” Fukui added.
Fukui has made similar remarks several times last week.
Currency players interpret those remarks as a general description of market conditions, rather than as a signal Japan is preparing to intervene in the currency market to hold down the yen.
In a recent interview with Dow Jones Newswires, former senior Ministry of Finance official Eisuke Sakakibara expressed a similar view, saying the MOF is unlikely to step in.
“I don’t think (the ministry) will be able to conduct intervention.
“At a time when the U.S. (and other advanced economies) are pressing China to revalue the yuan by a big margin, it would look awkward if Japan intervenes,” Sakakibara said.
The country’s benchmark Nikkei 225 Stock Average ended the morning session down 2.6% at 13274.93. At 0245GMT, the dollar was changing hands at Y106.70, little changed from Friday’s New York closing.
The meeting of financial heads of the G7 countries will be held Feb. 9 in Tokyo. As the finance minister of the host country, Nukaga will chair the meeting.
Filed by Egor Ouzikov under International Financial Architecture Reform