10 August 2001, 09:14  Japan's Kuroda says no need for yen to rise

TOKYO, Aug 10 - Japan's top financial diplomat, Haruhiko Kuroda, on Friday appeared unhappy with a recent rise in the yen at a time when the world's second-largest economy remains stubbornly weak. Japanese currency authorities, including Finance Minister Masajuro Shiokawa, have been signalling their tacit acceptance of a natural fall in the yen, which could support the fragile economy by boosting overseas sales, helping Japan's powerful exporters. "There is no need now for the yen to strengthen against the euro and the dollar," said Kuroda, vice finance minister for international affairs, when asked his view on the U.S. unit's overnight drop against the yen. His comments came after the dollar dipped to a two-month low of 121.35 yen in New York on Thursday, suffering a vicious selloff against a host of major currencies. In late morning trade on Friday the dollar had recouped some of those losses to stand at 122.20 yen, helped by demand from Japanese importers and investors keen to take advantage of the higher yen to buy Treasuries.
Kuroda also reiterated his mantra that the euro should strengthen further against other major currencies, given the euro-zone's economic fundamentals. "It is natural and right for the euro to strengthen against the dollar... It is strange for the euro not to rise against the yen," Kuroda told reporters at the ministry. Despite growing speculation that the U.S. economic slowdown may last longer than expected, Kuroda stuck to his view that he expected a gradual U.S. recovery later this year. "The U.S. economy is slowing. But personal consumption and housing investment are firm. I don't think we need to change our view that the U.S. economy will gradually recover in the second half of this year."
In contrast, Kuroda remained cautious about his own country. "The economy contracted slightly in the first quarter. I don't know about the second quarter, but I don't expect a good figure," he said. Most economists agree that April-June gross domestic product (GDP) -- due to be released on September 7 -- will show a contraction for the second straight quarter, meeting a common definition of recession. Asked his view on how the Bank of Japan (BOJ) should conduct monetary policy, Kuroda said: "As our government representatives who attended the BOJ Policy Board meeting have been saying, the continued fall in prices means deflation and that is not appropriate. "I hope that the BOJ will conduct policy to stablise price movements, although the BOJ is the one to decide how to do so." His comments came on the heels of recent remarks by government officials that the central bank should do more to help the flagging economy. Most market watchers, however, are betting on no change in monetary policy when the BOJ Policy Board meets next Monday and Tuesday. In March, the BOJ adopted a quantitative easing policy in which it effectively holds interest rates near zero by flooding the money market with liquidity so that banks' reserves at the BOJ stay at around 5 trillion yen ($40.94 billion).

© 1999-2022 Forex EuroClub
All rights reserved