While the Japanese yen is trading at or near a 20-year low, the Japanese government has not been intervening to keep currency values low since 2004, US Treasury Secretary Henry Paulson said on Tuesday.
"As far as we can see there's been no intervention into their currency since very early in 2004," Paulson said in response to questions from members of the House of Representatives Ways and Means Committee.
"Some people might not like where it's trading, but it's my job to support and fight for free competitive markets, and I believe that the yen is trading in a competitive marketplace based upon underlying economic fundamentals," he said.
The yen slipped broadly on Paulson's comments. Paulson said it was his job to be vigilant and watch all currencies. "Particularly, given some of the publicity coming out of Europe, I've looked at the yen carefully," he said.
The yen's weakness is expected to be a topic of discussion at a meeting of finance ministers from the Group of Seven major industrialised nations in Essen, Germany on Thursday and Friday. Japan's economy is growing after many years of stagnation, although there is deflation, Paulson said.
"It's growing, and it's important - we all are benefiting from that growth - and it's important to keep it growing," he added. A British Treasury official said on Tuesday in London that exchange rates should reflect economic fundamentals and is looking forward to debate with its G7 partners.
"We look forward to discussions at the G7 this week," the spokesman said. "As was made clear in the G7 communique last year our view is that exchange rates should reflect economic fundamentals."
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