Amid weekend talks of finance ministers and central bankers from the Group of 20 in Moscow, the participants came up with the logic that Japan has supporting grounds to keep stimulating its stagnant economy as long as the policy makers cease publicly advocating a sliding yen. Unlike many economists and traders blaming the Japanese authorities on manipulating Japanese yen via easing programs, the meeting signaled that the ongoing Japanese stimulus is rather required to counter the deflationary Japanese economic stance.

After the meeting, Brazilian Finance Minister, Guido Mantega opined, “There was no censure of the Japanese attitude, which was considered a policy to develop its economy and not to intentionally devalue.” This supporting statement from the finance minister of Brazil clearly exhibits the support of international economies over Japanese easing regime and counter-deflation measures. Looking figuratively, the Japanese currency was 0.5 percent weaker relative to USD, standing at 93.97 per dollar. Further, amidst positive economic outlook, stock indices have also gained with Topix gaining up to 2.1 percent.

In an effort to tackle the negative spillover of Japanese stimulus, Group of 20 nations have agreed to monitor the Japanese monetary policy and assured that the same, i.e., policy, shall be exercised only to fulfill the requirements or needs of domestic economy, but not to intentionally devaluate currency. While the Yen has become relatively weaker compared to the USD, some market participants are also complaining that the stance has led to the weakening of the USD relative to other currencies internationally.

At one side, where some are claiming that the monetary stimulus is being executed intentionally as a tool to devaluate Yen and a move towards currency war, on the other end, Japanese policy makers are advocating that the move has been executed only to protect the domestic economy from the harsh grip of deflation.

Assessing current international market stance and ongoing monetary easing programs at major economies around the world, it seems that the world economy might directly or indirectly head towards currency war with persisting currency regimes in the name of monetary stimulus or easing.