The yen’s steep tumble has sparked criticism from the head of the US Federal Reserve Bank of St. Louis, a Russian central banker who warned over a global currency war and Jens Weidmann, the head of Germany’s Bundesbank, .
On Monday, Weidmann said the result of government meddling in central bank policies, citing Japan as an example, “could be a much stronger politicising of exchange rates”.
“Up to now the international monetary system has weathered the (financial) crisis and avoided a devaluation race and I hope very much that will remain the case,” he said.
The monetary easing policies undertaken by the central banks of numerous industrialised countries — predominantly the US Federal Reserve — during the crisis, primarily aimed at unfreezing financial markets, have also tended to lower the value of their currencies.
A number of emerging nations such as Brazil were unhappy and spoke of a currency war that would see nations work to bring down the value of their currencies, possibly for trade gains.
China has been a regular target of criticism that it manipulates the value of its yuan currency to prop up the country’s export-heavy economy.
