Ford Accuses Japan of Currency Manipulation

Ford Motor Co. says the Japanese government has directly intervened to weaken the country's currency and help its domestic carmakers.

"Toyota and [Nissan] said, We need a weaker currency,' and the currency got weaker," declares John Hinrichs, president of Ford's Americas unit, in a bluntly worded speech to the Economic Club of Chicago this week.

A weak yen makes Japanese exports more attractive in foreign markets. Hinrichs says the yen's recent decline has boosted profits on exported Japanese vehicles by roughly $2,000 per unit.

Hinrichs notes that Toyota booked a foreign exchange gain of nearly $2.5 billion half its total net profit in October-December. "That," he fumes, "is a big deal."

Ford is urging Congress to reject the Trans-Pacific Economic Partnership Agreement trade pact unless it contains strong currency discipline. Japan has repeatedly denied decades of accusations that it manipulates its currency.

Hinrichs agrees that countries have a right to pursue a "sound" monetary policy, such as the U.S. Federal Reserve's quantitative easing program. But he complains that Toyota President Akio Toyoda openly supported Japan Prime Minister Shinzo Abe in saying the country needs a weaker currency. "That's a corporate policy statement," he claims.

Toyota notes that then-Fed Chairman Ben Bernanke said last July that Japan's weak yen is a result of domestic monetary policy actions to end economic deflation in the country, not a direct attempt to manipulate the exchange rate.