Bergsten says dollar could hit 150 yen short term
08:54 a.m. Jun 06, 1998 Eastern
Geneva, June 6 (Reuters) - U.S. economist Fred Bergsten said on Saturday
the dollar could hit 150 yen in the short term if central banks did not
intervene to halt its rise but it was likely to fall on a six to 12
month view.
''The yen could easily slide to 150 (per dollar) left to its own
devices,'' said Bergsten, a former presidential advisor who is the
director of the Washington-based Institute for International Economics.
Speaking on the sidelines of the annual congress of the ACI - The
Financial Markets Association, he said the Japanese economy was very
weak and likely to get weaker in the coming months as the Japanese
authorities had not yet succeeded in stimulating demand.
Japan's failure so far to address its domestic economic problems was the
reason why central banks from major industrial nations had not yet
intervened jointly, he said. The dollar rose as high as 139.94 yen on
Friday, its best showing in seven years.
''The lack of intervention is based on the lack of confidence in
Japanese economic policy,'' Bergsten said.
Still, central banks would not be able to stand aside for much longer,
he said.
He said he would expect co-ordinated central bank intervention if the
yen approached 150 per dollar or began to show signs of going into
freefall.
Still, the dollar would struggle to extend its three-year rally much
beyond six to 12 months, Bergsten said. This was particularly because
the US currency was already 30 pct overvalued against the yen, he said.
''In six to 12 months, long run fundamentals will begin to carry the
day,'' said Bergsten. ''We are building up to such a level of imbalance
that we can be absolutely sure they will do so.''
Copyright 1998 Reuters Limited. |
