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Trade protectionism does not benefit the parties involved

ILLUSTRATION. Governor of the Central Bank of Japan (BoJ) Haruhiko Kuroda

Source: Reuters | Editor: Hasbi Maulana

KONTAN.CO.ID – BUENOS AIRES. Bank of Japan Governor Haruhiko Kuroda delivered a statement (21/7) to the leaders of the countries with the largest economies to withdraw from the tariff war. He also said that a stable currency is beneficial for everyone.

Kuroda was speaking while attending a meeting of the financial leaders of the G20 nations in Buenos Aires, Argentina, in response to US President Donald Trump’s question that Europe and China are manipulating currencies to support their economies.

“It is desirable for the currency to move stably and reflect economic fundamentals,” Kuroda said. “This is something that we have achieved in the deals in the G7 and in the G20,” he said.

Kuroda also hopes the debate in the G20 will lead to easing of tariff increases between the United States and China. “Trade protectionism is of no benefit to the parties involved. I think restraint is ultimately necessary,” he said.

Trump has broken the precedent for his presidency in recent days with comments criticizing the strength of the dollar and the monetary policy of the US Federal Reserve and central banks in China and Europe. He tweeted on Friday that taking the Fed’s rate hike had taken the US “competitive advantage” in exports.

Trump’s comments have sparked fears that the currency will become a new battleground in a simmering trade war.

Arriving in Buenos Aires, US Treasury Secretary Steven Mnuchin told reporters that Trump was not trying to interfere in the currency market.

This subject is particularly sensitive for Japan because its central bank, under Kuroda’s leadership, has pursued a massive quantitative easing program to spur inflation.

After five years of easing, the BOJ’s efforts to boost inflation have brought minimal results. The yen continues to weaken which could leave Japan open to criticism from its trading partners.

The United States this month imposed a 25% tariff on imports of US $ 34 billion worth of Chinese goods. China quickly responded with increased tariffs on US goods.

Trump has imposed tariffs on imported steel and aluminum, a blow to Japanese exporters, and has also criticized Japan for its trade surplus as well as the small number of American vehicles it imports.