Asia Times: Dollar climbs to 1-week high as Japan seeks to stem yen's rise



	April 24, 1999	atimes.com

Japan Economy

Dollar climbs to 1-week high as Japan seeks to stem yen's rise

Tokyo - The dollar rose Thursday to a one-weekhigh against the yen amid expectations Japan will find supportfrom other Group of Seven industrialized nations for its bid tocurb gains by the yen.

Japanese officials have repeatedly called for a weaker yen,which helps the economy, ahead of the G-7 finance ministers'meeting Monday. Japanese exporters, though, are likely to keepthe dollar from rising because they will sell dollars for yen tobring profits home.

''The U.S. probably understands that the yen's rise above115 to the dollar is troublesome to Japan'' by making Japaneseexports less competitive abroad, said Mikiyasu Yuasa, a foreignexchange manager at Bank of Tokyo-Mitsubishi Ltd. ''Japaneseexporters will be delighted to see any climb in the dollar,because they want to sell dollars especially above 121.50 yen."

The dollar traded as high as 120.40 yen, its strongest sinceApril 13. At 5:00 p.m. in Tokyo it was at 119.96.

The U.S. currency was lifted also because of the euro's riseagainst the yen. In buying euro against the yen, traders oftensell yen for dollars and then use the dollars to buy euro.

The European single currency rose after the Wall StreetJournal interactive edition quoted French Finance MinisterDominique Strauss-Kahn as saying that a further fall in the euro''doesn't appear desirable'' and that the euro-dollar level ''isnow close to the lower end of a reasonable range."

The euro Wednesday fell to its lowest level since itsintroduction on Jan. 1, reaching $1.0575. To be sure, Strauss-Kahn was also quoted as saying that the currency's current value''isn't worrying'' as it helps European exporters.

''I expect more people to view the euro's current level asits bottom,'' said Ryuichi Takami, a foreign exchange manager atSanwa Bank Ltd., which bought euro Thursday.

''There's a chance that the G-7 officials will discuss theeuro'' to stem its recent weakness following Strauss-Kahn'sremarks, said Hidenori Watanabe, chief dealer at Dai-Ichi KangyoBank Ltd. ''The euro was bought against the yen, which in turnpushed up the dollar above 120 yen."

The euro was quoted at $1.0619, up from $1.0584 in late NewYork trading yesterday. It was quoted at 127.59 yen, up from126.845 yen in New York.

With the latest gains against the yen, the dollar has risenfor a third day amid speculation the G-7 ministers will discussways to weaken the yen when they meet in Washington next week.

Bank of Tokyo-Mitsubishi's Yuasa said he didn't expect the G-7 nations to deliberately weaken the Japanese currency fromcurrent levels. Still, should the dollar fall below 115 yen, theU.S. will support any action by Japan to buy dollars for yen tostem the yen's rise, he added.

That's because Japanese Vice Finance Minister forInternational Affairs Eisuke Sakakibara said Monday that ''theU.S. understands that a premature and excessive rise in the yenis undesirable for the Japanese economy.'' The remarks followedhis trip to Washington, where he met with his G-7 counterparts.

Meanwhile, Haruhiko Kuroda, director-general of the FinanceMinistry's International Bureau, declined to comment on whetherthe G-7 will issue any statement on currencies following theirfinance ministers' meeting Monday. He added he won't comment onday-to-day movements in the yen.

Japan's economy is in its worst postwar recession. Thoughthe government forecast growth of 0.5 percent for the year endingMarch 31, 2000, the International Monetary Fund predicted Tuesdaythat the economy will contract 1.4 percent in 1999.

(Bloomberg)

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