MOSCOW Jan 16 (Reuters) - Japan is acting to weaken its currency and there is a danger that others will follow suit and foster a round of destabilising devaluations, Russian central banker Alexei Ulyukayev said on Wednesday.
"We're on a threshold of a very serious, confrontational actions in the sphere that is known ... as currency wars," the central bank's First Deputy Chairman told reporters.
Russia holds the G20 presidency this year, a forum at which currencies and their relative values is likely to surface.
"The recent decision by the new government of Japan regarding very protectionist monetary policy ... this is a course towards a sharp depreciation of the yen," Ulyukayev said.
"Other colleagues from respected central banks and governments already pursue this policy. This is not a path towards global coordination but a separation."
Since coming to power late last year, Japanese Prime Minister Shinzo Abe has kept up a drumbeat of pressure on the central bank to deliver bolder monetary easing.
The euro rose to its highest in 20 months against the yen this week as Japanese officials ramped up pressure on the Bank of Japan to ease monetary policy aggressively and weaken the yen.
That may have prompted Jean-Claude Juncker, head of the Eurogroup of euro zone finance ministers, to tell business leaders on Tuesday that the euro was "dangerously high".
He did not elaborate but his comment took the wind out of the euro's sails on Wednesday even though European Central Bank Governing Council member Ewald Nowotny said he did not share the concern and Germany's economy minister said he did not see the euro as overvalued.
Despite years of global economic stress, a currency race to the bottom has so far been a dog that hasn't barked, notwithstanding howls of pain from emerging markets who could face more of the same as Japan quickens its pace of money printing.
The Federal Reserve, the Bank of England and the European Central Bank have all cut interest rates close to zero and flooded their banking systems with cash to try to restore confidence and encourage investors to buy riskier assets.
Meanwhile, the Swiss National Bank has successfully capped the rise of the Swiss franc for about 18 months.
As newly minted cash pours into emerging economies in search of higher yields, either their exchange rates will rise, making exports less competitive, or they will have to cut interest rates and/or intervene to hold down their currencies. That could fuel credit and asset price booms that sow the seeds of inflation.
Bank of England Governor Mervyn King, approaching the end of his tenure, warned late last year that too many countries were trying to weaken their currencies in a way that could create problems in 2013.
The Bank of Russia left monetary policy unchanged on Tuesday and sounded a relatively hawkish note on inflation. Ulyukayev said rates could be moved as early as next month.