Japan, U.S. Haggle Over Yen Worry In G-7 Communique
Thursday, January 20, 2000
TOKYO (Nikkei)--The Group of Seven leading industrialized nations are in the final stages of consultation over whether to express concern about the strong yen in a communique they issue after a weekend meeting of finance ministers and central bank governors, sources familiar with the matter said Wednesday.
To secure U.S. and European cooperation to curb the yen's rise, Japan will promise to continue structural reforms and macroeconomic measures aimed at stimulating the economy. To that end, Bank of Japan Governor Masaru Hayami will vow at the G-7 meeting to maintain the BOJ's zero interest rate policy for the time being, the sources said.
Japan hopes the communique will explicitly state that the concern about the strong yen is shared by all the G-7 countries. "I would think last September's expression should be repeated," Finance Minister Kiichi Miyazawa said Wednesday. BOJ Governor Hayami also said that even though the yen currently stands weaker than late last month, "it is still too high and is having a deleterious impact on the domestic economy."
European participants are supportive for Japan's call because a stronger euro against the yen would help stave off potential inflation resulting from an economic recovery.
However, the U.S. takes a cautious stance. Treasury Secretary Lawrence Summers is concerned that if the U.S. cooperates with Japan in driving up the dollar against the yen, Japan might slack off in its economic reforms.
Japan will seek to win U.S. understanding by pledging to maintain the zero interest rate policy, the expansionary fiscal policy in the fiscal 2000 budget and deregulation reforms, the sources said.
(The Nihon Keizai Shimbun Thursday morning edition) |
