China and South Korea's anxiety over the rapidly falling yen came to the fore on Monday as senior officials said their exporters could be hurt by Japan's attempts to pull its moribund economy out of a two-decade slump.
Beijing and Seoul understand the need for Tokyo to revive its $5 trillion economy and escape persistent deflation.
But they are worried that the massive monetary and fiscal stimulus championed byJapanese Prime Minister Shinzo Abe has sharply weakened the yen and put their exporters at a disadvantage in global markets.
So far, Chinese and South Korean officials have refrained direct action to maintain competitiveness, such as intervening by buying dollars in currency markets, but there is a risk of a response if their export sectors are severely hampered.
"(Japan) will look to keep the economy growing by boosting exports through the yen's depreciation," Xu Shaoshi, chairman of China's National Development and Reform Commission, said at a meeting with the South Korean finance minister in Seoul.
"This is a policy that will affect South Korea and China, and therefore needs to be monitored closely," Xu said.
PLUMBING LOWS
The yen fell to a five-year low against the dollar on Monday, and has plunged 26 percent over the past 15 months.
With the Chinese yuan and Korean won both gaining against the dollar this year, the impact has been even more pronounced on the exchange rates between three of the world's top seven exporting nations.
The yen hit a 15-year low of 5.7533 yuan and a 5-year low of 9.9983 won on Monday. Over the past 15 months, it has weakened by nearly 30 percent against both currencies, Thomson Reuters data shows.
Source: Reuters
