Targeted by Pro-Japan Candidate

Did Japanese government wanted to intervene in United States Presidential race? The government disputed that a campaign promise of one of the candidates was based on a wrong recognition of Japan’s intervention in foreign exchange. It is going to make the thing straight through diplomatic channel. While the government believed in that the candidate was familiar to Japan-U.S. relations, Japan was not so big issue in the race.

It was an article on a regional newspaper in Minnesota, Star Tribune, posted by former Secretary of State, Hillary Clinton. “China, Japan and other Asian economics kept their goods artificially cheap for years by holding down the value of their currencies,” wrote Clinton in her article. Recognizing those activities destructive for American workers, Clinton promised to make efforts, as future President, for tough new surveillance, transparency and monitoring regimes as well as effective new duties, tariffs and other measures.

Diplomatic section of Japanese government must have shocked by the comment of supposedly pro-Japan candidate, which included Japan in Asian group of forex manipulators. Ambassador to U.S., Ken-ichiro Sasae, interpreted Clinton’s comment as a misunderstanding. “Foreign exchange rate stands on various elements and U.S. monetary authority does not have a notion that Japan has been manipulating it,” told Sasae in his press conference in Washington D.C. on Thursday. Sasae accepted Clinton’s comment as a human error and was going to urge her to have correct knowledge.

Bank of Japan has continuously intervened in foreign exchange, anyway. One of the big operations was exercised in the fall of 2011, when the bank sold ¥8 trillion of Japanese yen on one day. It was to block further hike of yen value at ¥75 against $1. Forex intervention is one of the official jobs of BoJ.

According to the description of BoJ homepage, its forex dealers arrive office as early as 7 in the morning. They convene morning meeting to analyze moves in European and American markets and make their plan for the day. When the market shows abrupt moves with possibility of negative impact on Japanese economy, the hotline connected with Ministry of Finance rings and the dealers are deployed to the desks and start monetary intervention based on a decision of the authority.

BoJ Governor, Haruhiko Kuroda, has been putting impact on market. When he referred to “too cheap Japanese yen” in June last year, value of yen suddenly dropped by ¥2. It is possible that ordinary operation of Japanese monetary authority was targeted by a U.S. Presidential candidate as negative against U.S. workers. Japanese government needs to understand that an important ally can be a target in the harsh race of presidential campaign.