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To: posthumousone who wrote (27257)	9/25/1999 10:21:00 PM
From: LTK007	Respond to of 99985

Bloomberg's reporting on G-7 Sat, 25 Sep 1999, 10:15pm EDT G-7 Ministers Suggest It's Up to Japan to Bring Down the Value of the Yen By Michael McKee and Phred Dvorak G-7 Suggests It's Up to Japan to Slow the Yen's Rise (Update1) (Adds detail from the statement and briefings; type GSEV for a special report.) Washington, Sept. 25 (Bloomberg) -- It's up to Japan alone to take actions to slow the surging value of the yen, finance ministers and central bankers from the Group of Seven leading industrial nations said today. Bank of Japan Governor Masaru Hayami later said the Japanese central bank ``will respond appropriately and in a timely manner to developments in financial markets, including currency markets.' That suggests the bank may be willing to print more money -- something it said as recently as last Tuesday it wasn't prepared to do to slow the yen's rise. ``We share Japan's concern about the potential impact of the yen's appreciation for the Japanese economy and the world economy,' the G-7 officials said in a statement released after a one-day meeting in Washington. While the G-7 said the yen's rise could derail Japan's recovery from its worst recession since World War II and slow growth throughout the world, the leaders pledged only to ``continue to monitor developments in exchange markets and cooperate as appropriate.' That matches word for word the declaration after the last G-7 meeting in February and suggests the G-7 countries -- the U.S., Japan, Germany, France, the U.K., Italy and Canada -- aren't prepared to immediately engage in a joint effort to weaken the currency. The yen's 17 percent rise against the dollar and the euro in the past three months makes Japanese exports more expensive. `Ample Liquidity' ``Japanese authorities reiterated their intention to implement stimulus measures until domestic demand-led growth is solidly in place and, in the context of their zero interest-rate policy, to provide ample liquidity until deflationary concerns are dispelled,' according to the statement issued after a meeting lasting more than five hours at the Decatur House near the White House. In a news conference after the meeting, Treasury Secretary Lawrence Summers said ``Japan was the key focus of discussion,' he said. ``It's useful for me not to go beyond the words of the communique,' he said. ``The statement really says everything that we want to say on cooperation on those questions.' Italian Treasury Minister Giuliano Amato told reporters the ``G-7 does not rule out intervention as an instrument of cooperation.' U.S. Economy Discussed German Finance Minister Hans Eichel said the ministers also discussed the possible overheating of the U.S. economy. ``Naturally that has played a role' in the discussions, Eichel told reporters. ``In his remarks, (Fed Chairman Alan) Greenspan has made it clear that he is monitoring that very closely.' Mention of the yen in the statement was unusual. The G-7 has in the past avoided mentioning individual currencies. The April, 1995 G-7 statement calling for an ``orderly reversal' of exchange rates did not specifically mention the dollar or yen, though the statement was precipitated by the dollar's fall to 80.63 yen. Some officials at Japan's Ministry of Finance floated the idea of coordinated yen sales by the U.S. and possibly other G-7 countries in the days before the meeting. An hour-long meeting between Japanese Finance Minister Kiichi Miyazawa and Summers this morning at the Treasury Department didn't produce even the usual statement that both sides had agreed to monitor developments in exchange markets and cooperate as necessary. Interventions, once widely used to manipulate currency values, have fallen into disfavor. The last time the U.S. joined with Japan to intervene in currency markets was June 18, 1998, when they sold dollars for yen to prop up the Japanese currency, which had fallen to 147 to the dollar. European countries haven't joined in a G-7 intervention in four years. Europe Trade One reason the ministers are in no hurry to help Japan sell yen is that while much of East Asia may be relying on a Japanese economic rebound for the investment and trade it would bring, the U.S. and Europe are not. European Central Bank council member Otmar Issing said yesterday that European policy-makers aren't much concerned about the effect of exchange rates on trade because the 11-nation euro area's dependence on commerce outside the region is shrinking. And while the U.S. deficit with Japan widened in July to a record $6.8 billion from $6.3 billion in June, that trade gap has had little impact on domestic growth and is not the politically charged issue it once was. Although the U.S. hasn't changed its policy of favoring a strong dollar, Summers said last week the yen's rise won't slow U.S. growth. ``The basic momentum of our expansion should be maintained,' he said. European countries, looking to jump start stagnant growth on the continent, have benefited from the stronger yen, which makes European products more competitive. Germany, Europe's biggest economy, reported a 3.3 percent rise in overseas orders in July. The euro's current exchange rate is ``appropriate,' Bundesbank President Ernst Welteke said earlier this month, ``because it doesn't hamper strengthening demand from abroad but it also doesn't pose any threats for price stability at home.'