By Tetsushi Kajimoto
CHENGDU, China (Reuters) – Japanese Finance Minister Taro Aso said on Saturday that he was closely watching China’s economy and declines in the yuan as the impact of Britain’s vote to leave the European Union dominated a gathering of the Group of 20 leading economies.
Speaking to reporters after the first day of the meeting of G20 finance ministers and central bankers in the southwestern Chinese city of Chengdu, Aso said he had agreed with U.S. Treasury Secretary Jack Lew on the need for structural reform in China and transparency in the yuan currency.
“Lew and I agreed to two points, that China needs to implement economic structural reform, and China needs to show greater transparency for its yuan currency system,” Aso said.
Aso said he had told the G20 meeting that the global economy continued a moderate recovery but downside risks to the outlook and uncertainty existed.
While declines in emerging market currencies have eased, China’s yuan currency has fallen further since the Brexit vote to levels seen when China made it flexible in June 2010, Aso said.
“I said (at the G20 meeting) that we need to pay attention to the future direction of the Chinese economy, including the yuan,” he said.
Aso said excess currency volatility and disorderly moves would hurt the economy, underscoring resolve to ensure stability in currency and financial markets.
The June 23 Brexit vote caused a spike in the safe-haven yen to 99 to the dollar
“Now it has stabilised at around 106 yen. Under such circumstances, I did not make remarks on currencies” in a bilateral meeting with Lew earlier on Saturday, Aso said.
During previous talks earlier this year, Aso and Lew voiced different views on currency moves. While Aso warned that the yen was rising too rapidly, Lew maintained that foreign-exchange moves were orderly, a remark taken by markets as a caution against intervention.
Lew said commitments by G20 members to refrain from competitive currency devaluations have helped sustain economic confidence, according to a U.S. statement summarising discussions between the two finance chiefs.
(Reporting by Tetsushi Kajimoto; editing by Adrian Croft)