To: donald sew who wrote (25496 ) 9/10/1999 3:28:00 PM From: Don Green Respond to
U.S. Authorities Reluctant To Prop Up Dollar Saturday, September 11, 1999 WASHINGTON (Nikkei)--Judging that the stronger yen accompanying Japan's economic recovery poses little threat to the U.S. economy, U.S. monetary authorities appear increasingly unwilling to conduct a joint intervention in support of the greenback. U.S. President Bill Clinton said Thursday that he was "real pleased" about the news that Japan's GDP grew by 0.2% in the April-June quarter. Clinton also tried to ease fears of a stronger Japan. "I know some in America are worried," he said. "They're afraid that a resurgent Japan means more competition for money and more pressure on the dollar." The president contended that an economic recovery in Japan will benefit the U.S., since bigger sales of U.S. products in Japan will help reduce the U.S. trade deficit. The same day, various U.S. monetary officials made statements asserting that the stronger yen will not seriously harm the U.S. economy. So far, the dollar's drop against the yen has no "significant implications" for the economy, said William McDonough, president of the Federal Reserve Bank of New York. Echoing McDonough's comments, U.S. Federal Reserve Board Governor Roger Ferguson remarked, "It seems to me unlikely that we'll see a significant uptick in inflation from the change in the exchange rate." On Wednesday, Treasury Secretary Lawrence Summers stressed that the U.S. policy of supporting a strong dollar remains unchanged. Still, pundits here say monetary authorities are willing to tolerate the yen's appreciation so long as it remains in proportion with Japan's economic recovery. The pundits point to the Fed officials' statements as indicating their belief that a higher yen brought about by Japanese domestic factors will not seriously damage the U.S. economy. (The Nihon Keizai Shimbun Saturday morning edition)
