US, Japanese officials meet ahead of APEC meeting in Hong Kong

By Andrea Shalal

BANGKOK, Oct 16 (Reuters) - Japan no longer faces the deflationary environment that existed for more than a decade, and the level of its currency and monetary policy should reflect that, US Treasury Undersecretary Erin Browne said on Friday.

Browne, in Bangkok for the annual meetings of the International Monetary Fund and World Bank, told reporters that US and Japanese officials worked closely together to support stable, well-functioning markets and would continue to do so.

Browne and Treasury Deputy Secretary Francis Brooke met with Japan's vice minister of finance, Atsushi Mimura, this week on the sidelines of the IMF-World Bank meetings in Bangkok, a Treasury official said.

Browne told Reuters that markets should reflect the changed conditions in Japan, having earlier told reporters that Japan's economic performance deserved "considerable confidence."

"Japan no longer faces the deflationary environment that existed for more than a decade, and the yen level and monetary policy path must change along with that," she told reporters, underscoring Washington's interest in continuing the communications with Tokyo.

"Sharp, disorderly currency moves can ... really create much wider consequences that force investors to unwind positions and creates volatility across markets, and potentially raises financing costs in both the United States, and really globally," Browne told reporters.

Brooke, Browne and other US Treasury officials will travel on from Bangkok to Hong Kong to attend a meeting of finance ministers from the Asia-Pacific Economic Cooperation group scheduled for October 20 to 21.