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The prospect of a global “currency war” between the world’s major economies edged closer as the new Japanese Finance Minister, Taro Aso, pledged to prevent speculators driving up the value of the yen and reiterated Tokyo’s plans to alter the Bank of Japan’s mandate to deliver reflation.

“If excessive rises or falls in the yen due to speculation cause trouble for a lot of people, intervention would be a powerful tool, so there’s no reason why we should not use it,” Mr Aso told reporters. His words helped to push the yen down to a two-year low against the dollar.

Mr Aso also said he expects the government to reach an accord with the Bank of Japan next month to double the official inflation target to 2 per cent in order to combat deflation.

Other central bankers have also signalled changes to traditional inflation targeting frameworks. The Canadian central bank…

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