Finance Minister Aso suggests that the yen may have weakened more than it should have at this time. Japan does not want to be classified as a currency manipulator. The yen decline has now temporarily slowed bu has not really reversed course. Clearly, with the change in policy talk, there is a strong signalling component to the markets.
The G20 finance ministers are meeting and have sated they will reaffirm their pledge to "refrain from competitive devaluations" and would be committed to monitoring "possible monetary-policy spillover". The G20 group has not mentioned Japan by name, but this is what the markets are thinking and Japan is the currency elephant in the room. The pace of decline may slow as investors try to assess the views of policy-makers, but the direction is still the same, a lower yen.
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