Jack Lew, the US Treasury Secretary has issued a fresh warning to Japan to refrain from deliberately weakening its currency, the yen by intervening in the currency markets. The warning was made during a bilateral meeting before the second day of a Group of 7 (G7) finance leaders meeting in Sendai, Japan last weekend.

The US has been at loggerheads with Japan in the past over currency policy as the latter has tried to weaken its currency so that its exporters would gain competitive advantage by being able to sell their products more cheaply abroad.

The Bank of Japan has embarked on a radical and sustained quantitative easing that aims to increase the base money supply in Japan by as much as $650 billion every year. The program succeeded in weakening the yen for a time but, in recent weeks, with the likelihood of an imminent hike in US interest rates apparently fading, the yen has reasserted its strength.

“The US has done its own share of currency weakening with its 3 QE programs and, frankly, there’s something of a double standard in its warning to Japan,” said Tony Harris, Senior Vice President of Equity Trading at Softbank CIBC International.

“Investors wanting to know how to play the perpetual currency war only need to know one thing and that is, despite the coordinated statements decrying currency manipulation, it’s a case of every country for itself. Every country will favour its own export sector over those of others and weaken its currency accordingly,” he added.

Softbank CIBC International says it has taken long positions in precious metals on behalf of institutional clients while also buying dips in Japanese equities ahead of the Bank of Japan’s next policy meeting.

About Softbank CIBC International:
Softbank CIBC International (SCIBCI) LLC was founded in Tokyo, in 2007. Since our inception, we have grown to become one of the leading institutions in providing North America and European investors’ with access to Asia’s high yielding emerging market opportunities. With retail operations located in Toronto, the provisional capital of Ontario, Canada and corporate headquarters in Tokyo, Japan, in the simplest possible terms, it is SCIBCI’s sole aim to generate consistent high returns on investment through our solid commitment to conscientious and assiduous research and analysis.