Stitch,
I found your discussion of pegged exchange rates in S. Korea, Thailand, et al,, and the counter-productive efforts of these countries to maintain pegging after the currencies had become overvalued, very illuminating. Thank you.
There's one thing that puzzles me. Japan seems to have the same reluctance to allow its currency to depreciate the countries you mentioned do. When the yen fell to 130 per dollar not long ago, the Japanese MOF issued a statement saying it had fallen enough.
Japan's situation is very different from the rest of Asia. The Japanese do not hold large amounts of dollar denominated debt. What they do have, of course, are dollar assets(U.S. govt bonds) in abundance. Japan also doesn't have a current acct deficit to worry about. Therefore, why do you suppose the Japanese are opposed to a weaker yen? Do you agree with me that Japan is against a weaker yen? Any thoughts you care to express would be appreciated.
Geoff |
