Currency provision won’t be in Japan-U.S. trade deal

Japanese finance minister Taro Aso said on Tuesday that a currency provision won’t be included in a Japan-U.S. bilateral trade deal that the two countries are aiming to conclude by the end of this month.

When asked about the prospects for a deal, Aso told reporters after a cabinet meeting that “it is right” to assume that the currency provision, which is aimed at preventing competitive devaluation, won’t be included.

U.S. President Donald Trump said on Monday that the United States has reached initial trade agreements with Japan on tariff barriers and digital trade that will not require congressional approval.

Currencies are a touchy issue for Japan because it has been criticized for keeping the yen JPY= weak with massive monetary easing.

Japan has been resisting U.S. pressure to link trade with currency issues.

Trump has made clear he is unhappy with Japan’s trade surplus with the United States and wants a two-way deal to address it.

U.S. Treasury Secretary Steven Mnuchin had said that in future trade deals, including one with Japan, the United States would like to include a provision to deter foreign exchange manipulation.

Japan has resisted the idea, out of concern that it could tie its hands in monetary policy and any future attempts to check unwelcome spikes in the yen.

Japan has stayed out of the market since 2011 when it intervened heavily, including a joint intervention with its G7 peers, to stem excessive yen strength in the wake of devastating earthquakes and a tsunami that triggered the Fukushima nuclear crisis.