Japan and South Korea vowed to work closely amid challenges posed by the currency markets. The Thursday talks are seen as a bid to calm down the growing resentment in the global community over exchange rates.
Japan, who intervened to lower its currency last month, has drawn fire from its peers for the move as have South Korea who have spent an estimated 11 billion in the last two weeks buying dollars to keep the won down.
With the yen defying the government’s efforts and creeping to a new 15-year high yesterday, Japan has warned that it will not shy away from more easing measures to keep the yen down, and try and stave off further diminishing growth in the economy. Japan’s Prime Minister Naoto Kan has tried to appease partners by saying that Japan will also work in close cooperation with G7 partners on issues of currency.
South Korean President Lee Myung-bak has also issued calming statements to its peers, saying that at the Seoul summit of the G20 next month, discussion of coordination in foreign exchange will be a high priority.
The G7 and IMF meetings beginning Friday will be strongly influenced by the divisive currency issue, which is seen to be pitting developed against developing nations in Asia and South America.
Western countries are also concerned by the so-called ‘currency wars’ may be enough to derail the brittle global economy, while developing countries are also concerned that the ultra-low interest rates in developed countries are pushing up currencies and inflating prices.
