Bloomberg News

Azumi Demands Europe Make Greek Rescue Transparent as Euro Falls

October 04, 2011

Oct. 4 (Bloomberg) -- Japan called on Europe to implement its rescue of Greece as soon as possible as investor concern the European crisis is deepening drove the euro to a decade-low against the yen.

“In order to halt the extreme strength in the yen and weakness in the euro, Europe should make the process of rescuing Greece more transparent to the markets,” Japanese Finance Minister Jun Azumi told reporters in Tokyo today.

Azumi’s comments reflect growing international frustration with Europe’s inability to resolve the sovereign debt crisis after 18 months of incremental steps. The euro fell today to 100.76 yen, the weakest since June 2001, before reports that may indicate the European economy is slowing as governments implement austerity measures.

“At a time when none of the developed economies are doing that well, the biggest downside risk is that the problem in Europe deteriorates,” said Yoshimasa Maruyama, a senior economist at Itochu Corp. in Tokyo. Europe is a “possible spark for a global economic crisis.”

He added that Japanese finance ministers have traditionally refrained from commenting on other nations’ policies.

U.S. Treasury Secretary Timothy F. Geithner said last week that Europe’s debt woes are “starting to hurt growth everywhere.”

Azumi said he told Bank of France Governor Christian Noyer during a Tokyo visit yesterday that Europe needs to implement Greece’s rescue measures “as soon as possible.”

Greek Debt Losses

European finance ministers dropped clues that bondholders may have to take bigger losses on Greek debt in a second aid package, after a meeting in Luxembourg.

The ministers also pushed back a decision on the release of Greece’s next 8 billion-euro ($10.6 billion) loan installment until after Oct. 13. It was the second postponement of a vote originally slated for yesterday as part of the 110 billion-euro lifeline granted to Greece last year.

Azumi said that Japanese shares are excessively weak and that companies are doing better than their stock prices suggest. The Nikkei 225 Stock Average, which has lost more than 4 percent in the last month, slid 1.6 percent to 8412.12 at 1:41 p.m. in Tokyo.

Sony Corp. is “especially concerned” about weakness in the euro, Ryoji Chubachi, vice chairman, said at a convention near Tokyo today.

Goldman Sachs Group Inc. downgraded today its forecast for Japanese economic growth to 2.1 percent from 2.5 percent for the year starting April 2012, and to 0.1 percent from 0.2 percent for this fiscal year.

With supply chains restored after the March earthquake, “the Japanese economy will be strongly influenced by external demand conditions,” Naohiko Baba, chief Japan economist at Goldman, said in a report today.

In a sign of the weakness of domestic demand in the world’s third largest economy, Japan’s wages slid 0.6 percent from a year earlier in August, the third straight month of decreases, the Labor Ministry said today.

--With assistance from Ken McCallum in Tokyo. Editors: Ken McCallum, Paul Panckhurst

To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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