🚀 go-pugleaf

January 5, 1999

The Japanese yen Tuesday climbed to its highest level against the dollar in
months.  Some financial market analysts are mystified by the Japanese
government's apparent willingness to support a strong yet, which hurts
prospects for economic growth.

The Japanese yen lifted to 110.7 against the U.S. currency in Asia,
strengthening to its best level since June 1997.  The move came after a top
financial official was quoted by Japanese newspapers as forecasting a stronger
yet and a weaker U.S. economy for 1999.  He also shrugged off worries about
falling Japanese government bond prices, which are translating into higher
interest rates.

The head of Japan's economic planning agency also fanned the fires, saying the
yen's rise is unlikely to hurt business very much.  But the business community
is expressing dismay, since the strong yen means Japanese exports become more
expensive.

Private economists say they are puzzled by the Japanese government's apparent
support of the rising yet.  Bank of America currency strategist Marshall
Gittler says prospects for economic growth could be seriously threatened if
the yen does not fall back to 120 to the dollar.

"It seems almost suicidal.  I cannot really imagine why they seem to be
talking the yen up, if anything.  It is a disaster for the Japanese economy. 
The only source of growth besides public works and public spending is
exports, and exports are starting to get uncompetitive at this level."

Some analysts note Japan is talking up the yen just as the new European
currency, the euro, is making its worldwide debut.  They say Japanese policy-
makers may be trying to ensure the robust yen will stay in the running as a
major global currency, along with the euro and the dollar.

Japanese Prime Minister Keizo Obuchi is leaving Wednesday for a week-long
tour of Europe.  He is expected to call for closer cooperation on currency
market issues.	He may also reiterate his finance minister's recent
suggestion of target zones among the major currencies, to promote greater
financial stability.

Global Investing News at
http://www.cyberhaven.com/globalinvesting/


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