原标题：Will G7 pressure lead to new Plaza Accord for Japan?
原载于：Global Times
G7 members warned against competitive devaluation of currencies at a two-day meeting held in Sendai, Japan on Friday and Saturday, citing the potential damage it could do to confidence in the global economy. As the Japanese yen has appreciated recently and the Japanese government may be planning to intervene in the currency market, the government faces pressure from its G7 counterparts on the currency issue.
The game of monetary policies played by the G7 countries is quite interesting. As the world economy remains stuck in a pattern of slow growth and the prospects remain unclear, the world's major economies seem to be in trouble. Following the first US interest rate rise in almost a decade at the end of last year, the US Federal Reserve in its March meeting indicated it would raise interest rates twice this year rather than four times as it had suggested last year. Meanwhile, it is still unclear whether the Fed will raise rates in June. Amid constant arguments between dovish and hawkish views, Fed chief Janet Yellen has appeared closer to the dovish view, given the Fed's lack of confidence in the US economic recovery.
In addition, Yellen has been concerned that a rate rise could prompt chaos in global stock and currency markets, similar to what was seen last year, particularly the volatility in China's stock market and currency market, which put pressure on the US as well.
Japan and Europe have both adopted monetary easing policies in an effort to stimulate their economies, even going so far as to deploy negative interest rate policies. China, meanwhile, has applied multiple policy measures, trying to seek a balance between structural reforms and stable growth under the new normal.
Of course, some emerging markets are experiencing various anxieties. Global markets will watch the Fed's decision closely. As the world economy has fallen into a state of "new mediocre" in terms of its economic progress, the Fed still has a role to play as the world's "central bank."
As has been mentioned, if the Fed raises interest rates again, it would trigger big swings in China and other emerging markets. In comparison, with the Bank of Japan (BOJ) and the European Central Bank (ECB) having announced more loosened monetary policies, they now have to watch movements from the US and global markets carefully. The BOJ has defied market expectations by not pushing for greater stimulus, and the ECB has refrained from taking interest rates further into negative territory.
And in China, after the central bank's efforts to curb yuan speculation, the authorities have reduced expectations of further loosening policies. The People's Bank of China has only lowered the reserve requirement ratio (RRR) once so far this year, compared with last year when interest rates and the RRR were both cut five times.
The relative monetary policy stability among major economies has been interpreted by some market observers as being similar to the Plaza Accord in 1985, in which major economic players agreed on coordinated currency intervention so as to avoid a currency war caused by chain reactions in the global markets.
But it seems there is more to it than that. G7 finance leaders have remained cautious about member countries' exchange rate policies. They have also begun to keep a close eye on Japan. The yen has appreciated by around 9 percent since the start of 2016, and this has severely affected Japan's exports and posed a big setback for Abenomics. As the BOJ believes speculation has played a part in the yen's appreciation, this has made market watchers anticipate that Japan may intervene in the currency markets to stop the yen from strengthening further.
Apart from Japan, the current situation for global foreign exchange markets is seeing a rare balance, and G7 nations would like that to remain. But will Japan endure a 9 percent stronger yen? Japan has a long tradition of weakening its currency to make its exports more competitive against those of neighboring countries. Besides, one of Abenomics' objectives is to stimulate the Japanese economy through yen depreciation, which once happened in 2011.
Furthermore, the decline in the Japanese market is connected to the 1985 Plaza Accord. At the time, in order to address the US balance-of-payments crisis, Japan promised to facilitate liberalization of its financial market and foreign exchange market so as to make the Japanese currency fully reflect the country's economic fundamentals. This then led to a stronger Japanese yen, and the country embarked on a path of continued economic slowdown since the 1990s.
In a sense, Abenomics was designed to solve the structural problem brought to the Japanese economy by the Plaza Accord. Now that Japan's yen has strengthened and the G7 countries have warned against intervention from Japan to devalue the yen, will this situation lead to a new Plaza Accord?
The author is a research fellow with non-governmental think tank Charhar Institute.