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. Last Updated: 07/27/2016

U.S. Says Strong Yen Japan's Problem

WASHINGTON -- The United States sharply criticized Japan at a secret IMF meeting, arguing Tokyo was to blame for the strong yen that has hurt its economy and urging it to do more to revive growth, IMF sources said.


The sources, declining to be named, said Monday the United States pressed Tokyo to cut interest rates and increase its government budget deficit to boost its economy and its demand for imports.


The criticism at an International Monetary Fund board meeting Friday contrasted markedly with public efforts by both countries to smooth over their differences after coming to the brink of a trade war toward the end of last month.


The United States and Japan earlier this month cut interest rates in tandem, then jointly intervened in the currency markets to push up the value of the dollar against the Japanese yen by buying greenbacks.


But the sources said the United States made it clear at the IMF meeting that it believes the yen's rise against the dollar is a Japanese problem and its solution lies in Tokyo, not Washington.


"The U.S. insisted that it's a yen problem, not a dollar problem," one monetary source said.


Washington argues that Japan's economic policy mix -- from a distribution system that discourages imports to a credit policy that is still too tight -- works to keep the yen high.


Since the start of the year, the dollar has fallen over 12 percent against the yen, although it is well above record lows set in April.