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South Korea central bank questions Bank of Japan easing

DAVOS, Switzerland (Reuters) - South Korea's central bank governor on Saturday questioned the efficacy of Japan's decision to ease monetary policy, saying its decision to start buying assets in 2014 could have unintended long-term consequences.

The move by the Bank of Japan was also done in a hasty manner and would lead to large movements in the foreign exchange market, said Bank of Korea Governor Kim Chong-soo.

"What they did created a couple of problems," Kim said in an interview at the World Economic Forum in Davos. "One is that the level (of the currency) is affected, and the pace of change is also a problem. They did it too hastily."

Key for the Bank of Korea is a stable exchange rate, Kim added.

The yen has come under pressure since reports on Thursday quoted Japan's deputy economy minister, Yasutoshi Nishimura, as saying the yen's decline is not over, and that a dollar/yen level of 100 would not be a concern.

The Japanese currency is now trading around a 2-1/2 year low against the dollar at around 90 yen, as the market remained focused on Japan's pursuit of a reflationary economic policy.

Talk about a currency war has dominated discussions at the Swiss ski resort of Davos this week, with many central bankers and business executives questioning the wisdom of continuing an easy money policy.

Kim's comments come as top executives at Japanese companies say that the Bank of Japan has been too slow in responding to the yen's rise after the financial crisis.

"There is no explanation why the Japanese currency should appreciate 40 percent to the dollar after the financial crisis, while the won decreased compared to the dollar," said Nissan's <7201.T> Chief Executive Carlos Ghosn on Friday.

(Reporting by Kelvin Soh; editing by Jason Neely)

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