Japan warns France to stick to fiscal reform plans

By Agence France-Presse
Monday, May 7, 2012 23:32 EDT
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Japanese Finance Minister via AFP
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TOKYO — Japan on Tuesday warned French president-elect Francois Hollande to keep the nation’s fiscal discipline in place amid worries the new leader will overspend in a bid to boost the economy.

“Our stance is unchanged,” Finance Minister Jun Azumi told a regular news conference in Tokyo, according to Dow Jones Newswires.

“We want (France) to do what has been decided so far, and I’d like to tell them about that if there is the opportunity.”

On Monday, Azumi said Hollande “fully understands” the need for rebuilding European finances, despite his calls to review the European Union’s fiscal pact to include measures to spur growth. The treaty now stresses austerity efforts.

“I want him to act based on understanding the schemes and thinking that we, the IMF, and the G-7 have cultivated up to now,” Azumi said.

Azumi also said on Monday that election results in France and debt-strapped Greece could have a “destabilising” effect on the markets, warning traders against speculative currency moves.

The finance chief said he would respond “properly and appropriately” to any speculative-driven gains in the yen, which makes Japanese exports less competitive, and reduces the value of Japanese firms’ foreign income.

Japan has previously intervened in currency markets to tame the yen’s soaring value.

“I think there is a chance they are becoming a destabilising factor,” Azumi said of Hollande’s victory, while Greek voters punished pro-austerity parties.

“We must closely watch whether there are speculative movements taking advantage of political factors,” he told reporters.

The election outcomes are seen as a backlash against austerity measures aimed at battling the eurozone crisis, as pushed by French President Nicolas Sarkozy — who lost to Hollande — and German Chancellor Angela Merkel.

Following the elections, the euro skidded to $1.2954 in early trade Monday, its lowest level since late January, while also slumping to 103.22 yen at one stage, its worst since mid-February.

On Tuesday, the single unit was trading at $1.3035 and 104.20 yen.

Agence France-Presse
Agence France-Presse
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