Stock Problems Not Our Fault, Say the Japanese
Yen Hits Eight Year Low Against Dollar
The Japanese government on Wednesday renewed its verbal support for the yen as concern rose that a weaker Japanese currency could trigger a Chinese devaluation.
Haruhiko Kuroda, head of the International Bureau at the Ministry of Finance, warned the markets that the recent slump in the yen was "excessive". And Eisuke Sakakibara, the vice minister of finance for international affairs, told the Japanese media: "From here on we will take an aggressive stance on foreign exchange issues. I don't think the dollar/yen rate is the cause of global stock price declines."
The comments helped to push the yen nearly 2 stronger against the dollar in morning trading in Tokyo.
However, the currency later weakened to around 146 and dealers warned that the yen's recovery might not last, especially as there was widespread scepticism about whether the US would be prepared to intervene to support the currency.
On Tuesday the currency had touched an eight-year low of 147.63 to the dollar. Kiichi Miyazawa, Japan's finance minister, said he planned to meet Robert Rubin, US Treasury secretary during the first week of September. The meeting would discuss the US and Japanese economies, Mr Miyazawa added. Yesterday's comments by Japanese officials appear to have been designed partly to stave off accusations that Tokyo is fuelling an Asian crisis. There is growing concern in Tokyo that the US and other western countries are blaming Japan for the current Asian instability.
Analysts of international markets are concerned that China may be forced to devalue the renminbi if the yen falls much further, even though senior Chinese officials have repeatedly promised not to. On Tuesday, Liu Mingkang, deputy governor of the People's Bank of China, the central bank, said an adjustment to the exchange rate would not help China's long-term competitiveness and could prove counter-productive.
Thomas Foley, US ambassador to Japan, yesterday said he was confident that Keizo Obuchi, Japan's new prime minister, "was very determined and wholly aware of the challenges which Japan faces".
The US now "very deeply felt" that the Japanese government needed to take actions to boost the economy "as quickly as possible," he said in Tokyo.
"The view in Washington is that the Japanese economy is so important that how well it fares is critical to the recovery of the Asian economy and the world," he said.
The Financial Times, August 13, 1998 |
